Gratuity Calculator
Estimate the lump-sum gratuity payable to you under the Payment of Gratuity Act, 1972, based on your last drawn salary and years of service.
Estimated Gratuity
Calculation
How Gratuity Is Calculated
Gratuity is a statutory benefit paid as a lump sum when you leave a job after at least 5 years of continuous service, intended to recognize long-term service. The amount is based on your last drawn Basic + DA, not your full CTC, and the calculation differs slightly depending on whether your employer is covered under the Payment of Gratuity Act — most organized-sector private employers are, which uses a 26-working-day-month assumption rather than the 30-day calendar month used for uncovered employers.
Why Gratuity Matters in Salary Negotiations
Employers often quote gratuity as part of your overall CTC package, which can make a job offer look larger than the cash compensation you'll actually receive month to month. Since gratuity is only realized if you stay 5+ years, it's worth treating it as a separate, conditional benefit rather than counting it toward your immediate take-home comparison between offers.
Frequently Asked Questions
What is the gratuity formula?
For employers covered under the Payment of Gratuity Act, gratuity is (Basic + DA) × 15/26 × years of service, where years of service round up if the remainder is 6 months or more. For employers not covered under the Act, the formula uses a divisor of 30 instead of 26, and years aren't rounded up.
How many years of service do I need to be eligible for gratuity?
You need at least 5 years of continuous service with the same employer to be eligible, except in cases of death or disability, where the 5-year requirement is waived.
Is there a maximum limit on gratuity?
Yes. The statutory cap on tax-exempt gratuity is currently ₹20,00,000. Employers can pay more than this as an ex-gratia amount, but anything above the cap may be taxable.
Is gratuity taxable?
Gratuity received by government employees is fully tax-exempt. For private-sector employees covered under the Payment of Gratuity Act, gratuity is exempt up to the statutory limit, the actual gratuity formula amount, or your actual gratuity received — whichever is lowest.
Does gratuity show up in my CTC?
Many employers include a notional gratuity provision in your CTC structure, even though it's only payable as a lump sum when you leave after 5+ years of service. It's not part of your monthly in-hand salary.