🇮🇳 Payment of Gratuity Act, 1972

Gratuity Calculator India

Understanding your End of Service Benefits in India

How Gratuity Works in India

In India, gratuity is a monetary benefit given by the employer to the employee for rendering services to the organization. It is governed by the Payment of Gratuity Act, 1972.

Eligibility Criteria

You must have completed at least 5 years of continuous service with the same employer.
Gratuity is payable on resignation, retirement, or superannuation.
In case of death or disablement, the 5-year rule is waived.

The Calculation Formula

The formula depends on whether your employer is covered under the Gratuity Act.

For Employees Covered Under the Act:

Gratuity = (15 × Last Drawn Salary × Tenure) / 26

* Last Drawn Salary = Basic Pay + Dearness Allowance (DA)
* 15 = 15 days' wages
* 26 = Number of working days in a month

For Employees NOT Covered Under the Act:

Gratuity = (15 × Last Drawn Salary × Tenure) / 30

Frequently Asked Questions (India)

Is gratuity taxable in India?

For government employees, gratuity is fully tax-exempt. For private sector employees, it is tax-exempt up to ₹20 Lakhs over a lifetime.

Does the 5-year rule apply if I am fired?

Yes, you are eligible for gratuity even if terminated, provided you have completed 5 years of service and were not terminated for misconduct involving moral turpitude.

What if I work for 4 years and 7 months?

In most cases, this is not rounded up to 5 years for eligibility. You must complete 5 full years. However, for calculating the amount (once eligible), a period of more than 6 months is often rounded up to the next year.