Gratuity Calculator
Gratuity is a statutory right for Indian employees who have completed at least 5 years of service. The Payment of Gratuity Act, 1972 governs how it is calculated for most private sector workers.
🎁 Key Facts
- • Minimum 5 years of service required
- • Tax-free up to ₹20 lakh under Section 10(10)
- • Payable within 30 days of eligibility
- • ½ month salary per year of service (15/26 formula)
Sum of Basic Salary and Dearness Allowance
Minimum 5 years required
- Gratuity Amount
- ₹2,88,462
- Tax-free Amount
- ₹2,88,462
- Taxable Amount
- ₹0
- Statutory Cap
- ₹20,00,000
Gratuity is tax-free up to ₹20 lakh under Section 10(10) of the Income Tax Act.
Frequently Asked Questions
What is gratuity?
Gratuity is a lump-sum payment made by an employer to an employee as a token of gratitude for long service. It is paid at retirement, resignation, or in case of death/disability.
How many years of service are needed to be eligible for gratuity?
An employee must complete at least 5 continuous years of service with the same employer to be eligible for gratuity. For death or disability, there is no minimum service requirement.
What is the formula for calculating gratuity?
For employers covered under the Gratuity Act: (Basic + DA) ÷ 26 × 15 × Years of Service. For others: (Basic + DA) ÷ 30 × 15 × Years of Service.
Is gratuity taxable?
Gratuity received by government employees is fully tax-free. For private sector employees, gratuity up to ₹20 lakh is tax-free under Section 10(10). Any amount above ₹20 lakh is taxable.
What is the maximum gratuity amount?
The statutory cap on tax-free gratuity is ₹20 lakh. However, an employer can pay more than ₹20 lakh as gratuity, but the excess will be taxed as salary income.