Skip to calculator
Home
Home

Gratuity Calculator 2024

Calculate gratuity amount as per Indian Gratuity Act 1972. For private, government, and contract employees in India.

Calculate Your Gratuity

₹ 50,000

Basic salary + dearness allowance (last drawn salary)

5 years of service
Covered by Act
Private/Government (10+ employees)
Not Covered by Act
Small companies/Contract

Gratuity Eligibility

• Minimum 5 years of continuous service required
• Payable on retirement, resignation, death, or disablement
• Maximum gratuity limit: ₹20 lakhs (as per latest amendments)

Gratuity Calculation Results

Your Gratuity Amount
₹ 1,44,231
For ₹50,000 salary after 5 years of service
Last Drawn Salary
₹ 50,000
Total Service
5 years
Gratuity per Year
₹ 28,846
Formula Used
Covered Act

Gratuity Calculation Formula

(Last drawn salary × 15/26) × Number of years of service
= (50,000 × 15/26) × 5 = ₹1,44,231

Tax on Gratuity

• Government employees: Fully exempt from tax
• Private employees: Tax-exempt up to ₹20 lakhs
• Death gratuity: Fully exempt from tax
• Amount above ₹20 lakhs: Taxable as per income tax slab

Indian Gratuity Act 1972 - Complete Guide

What is Gratuity?

Gratuity is a statutory retirement benefit paid by employers to employees who have completed at least 5 years of continuous service. It's governed by the Payment of Gratuity Act, 1972 and is a form of appreciation for long-term service.

Gratuity Eligibility Criteria

  • Minimum Service: 5 years of continuous service (can be with breaks not exceeding 240 days)
  • Coverage: Factories, mines, oilfields, plantations, ports, railways, shops or establishments with 10+ employees
  • Eligible Events: Retirement, resignation, death, disablement due to accident or illness
  • Exclusions: Apprentices, trainees, daily wage workers (unless covered by state laws)

Gratuity Calculation Formulas

Employee Type Formula Maximum Limit Notes
Covered by Act
(Private/Government)		 (Last salary × 15/26) × Years of service ₹20 lakhs For each completed year or part >6 months
Not Covered by Act
(Small companies)		 (Last salary × 15/30) × Years of service No statutory limit As per company policy or contract
Government Employees (Last salary × ½) × Years of service ₹20 lakhs Based on CCS (Pension) Rules
Seasonal Establishments (Last salary × 7) × Seasons ₹20 lakhs Each season = 6 months

Gratuity Calculator FAQs

How is gratuity calculated as per Gratuity Act 1972?
Gratuity is calculated as: (Last drawn salary × 15/26) × Number of years of service. Last drawn salary includes basic salary + dearness allowance. Each completed year or part thereof exceeding 6 months counts as one full year.
Is gratuity payable after 4 years 8 months of service?
No. The Gratuity Act requires minimum 5 years of continuous service. However, if service is 4 years 8 months, it's rounded to 5 years only if it exceeds 6 months in the final year (which it doesn't). So you need to complete 5 full years.
What is the maximum gratuity limit in India?
The maximum gratuity limit is ₹20 lakhs (₹2,000,000) as per the latest amendments. Any amount above this is taxable. For government employees, it's also ₹20 lakhs as per 7th Pay Commission recommendations.
Can I get gratuity if I resign from my job?
Yes, you are eligible for gratuity even if you resign, provided you have completed 5 years of continuous service. Gratuity is payable on superannuation (retirement), resignation, death, or disablement due to accident or illness.
Is gratuity taxable in India?
• Government employees: Fully exempt from tax
• Private employees: Exempt up to ₹20 lakhs
• Death gratuity: Fully exempt
• Amount above ₹20 lakhs: Taxable as per income tax slab rates
What happens to gratuity if an employee dies?
In case of death, gratuity is payable to the nominee or legal heirs. The service requirement of 5 years is waived in case of death. The maximum limit is ₹20 lakhs and it's fully exempt from income tax.

Complete Guide to Gratuity in India 2024

Gratuity Act Amendments and Updates

The Payment of Gratuity Act, 1972 has seen several amendments. The most significant recent changes include:

  • 2023 Amendment: Increased ceiling from ₹10 lakhs to ₹20 lakhs
  • Tax Exemption: Enhanced from ₹10 lakhs to ₹20 lakhs under Section 10(10) of Income Tax Act
  • Maternity Leave: Now counted as continuous service for gratuity calculation
  • Fixed Term Employees: Made eligible for gratuity benefits

Gratuity vs Provident Fund vs Pension

Feature Gratuity Provident Fund (EPF) Pension (EPS)
Eligibility 5+ years service Immediate 10+ years service
Contribution Employer only Employee + Employer Employer only
Taxation Exempt up to ₹20L EEE status (tax-free) Taxable as per slab
Maximum Benefit ₹20 lakhs No limit ₹7,500/month

Important Judgments and Case Laws

  • R. Kapur vs. DDT (2002): Established that gratuity is not a bounty but a statutory right
  • Hindustan Times vs. Union of India (1998): Clarified continuous service definition
  • Bombay Dyeing vs. State of Bombay (1958): Early landmark case on gratuity rights
  • Recent SC Rulings: Extended coverage to contract workers and fixed-term employees

Gratuity for Different Employment Types

Government Employees: Covered under CCS (Pension) Rules, get higher benefits (½ month's salary per year)

Private Sector Employees: Covered under Gratuity Act if establishment has 10+ employees

Contract Workers: Eligible if principal employer has 10+ employees and contract is for 240+ days

Educational Institutions: Covered if they have 10+ employees (including teachers)

Steps to Claim Gratuity

  1. Submit Form I to employer within 30 days of becoming eligible
  2. Employer must issue notice in Form L within 15 days
  3. If no response within 15 days, employer must pay with interest
  4. If still unpaid, approach controlling authority within 90 days
  5. Collect payment via cheque/demand draft/electronic transfer

Tips for Maximizing Gratuity Benefits

  • Continue service beyond 5 years to increase gratuity amount
  • Ensure your basic salary + DA is properly reflected in payslips
  • Keep all employment documents and salary slips
  • Update nominee information regularly
  • Understand company policies if not covered by Gratuity Act
  • Consult CA for tax planning on gratuity amount