Gratuity Calculator India 2026
Calculate your gratuity entitlement using the official Payment of Gratuity Act formula. See gross amount, tax-free portion, and net payout for private sector and government employees.
Employee Type
Last Drawn Basic Salary (Monthly ₹)
₹
Basic + DA only. Exclude HRA and allowances.
Years of Service
Total Years of Service
years
Minimum 5 years required for eligibility
Gratuity Amount
₹2,01,923
Fully tax-free — within ₹20L limit
Formula
(15 × ₹50,000 × 7) / 26
Gross Gratuity
₹2,01,923
Tax-Free Amount (up to ₹20L)
₹2,01,923
Net Gratuity (In Hand)
₹2,01,923
Tax shown assumes 30% marginal rate on taxable portion. Actual tax may be lower depending on your income slab. Gratuity must be paid within 30 days of your last working day.
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Three facts that affect how much you actually receive.
5 years = the magic number
You must complete 5 continuous years of service to be eligible. If you leave at 4 years 11 months, you forfeit the entire gratuity. The exception: death or permanent disability — no minimum service required.
Tax-free up to ₹20 lakhs
Private employees receive a tax exemption under Section 10(10) on gratuity up to ₹20L. This limit was last revised in 2018. Government employees receive a 100% exemption with no upper limit.
4.81% of basic is in your CTC
Your employer accrues ~4.81% of your basic monthly as gratuity expense each month. It appears in CTC but you see it only at separation. Leaving before 5 years means the employer keeps it — not you.
Example: Basic ₹60,000/month, 8 years of service (private)
Gratuity = (15 × ₹60,000 × 8) / 26 = ₹2,76,923. This is well below the ₹20L tax-free limit, so you receive the entire ₹2,76,923 tax-free. If your basic was ₹2,00,000/month over 30 years, gratuity would be ₹34,61,538 — exceeding the ₹20L limit, making ₹14,61,538 taxable.
Gratuity Quick Reference — Years of Service
Gratuity at ₹50,000/month basic, private sector.
5 years of service
₹1,44,231
7 years of service
₹2,01,923
10 years of service
₹2,88,462
15 years of service
₹4,32,692
20 years of service
₹5,76,923
25 years of service
₹7,21,154
30 years of service
₹8,65,385
All amounts tax-free (below ₹20L limit at ₹50K basic)
Gratuity eligibility rules
Resignation after 5 years
Fully eligible
Retirement
Fully eligible
Termination (without misconduct)
Fully eligible
Death or disability
Eligible (no 5-yr rule)
Resignation before 5 years
Not eligible
Termination for misconduct
Can be forfeited
Frequently Asked Questions
Gratuity rules, tax, and eligibility explained
What is the gratuity formula for private sector employees?
Gratuity = (15 × Last Drawn Basic Salary × Years of Service) / 26. The "15" is 15 days of wages, "26" is working days per month. Years of service is rounded: 4 years 6 months = 5 years. This formula applies to companies covered under the Payment of Gratuity Act (10+ employees).
Is gratuity taxable in India?
Gratuity is tax-free up to ₹20 lakhs for private employees under Section 10(10). Any amount above ₹20L is taxable as salary. Government employees get a full exemption — the entire gratuity is tax-free regardless of the amount.
Do I get gratuity if I resign after 5 years?
Yes. Any employee who has completed 5 or more continuous years of service is eligible for gratuity on resignation. In case of death or disability, there is no minimum service requirement.
What basic salary is used for gratuity calculation?
Gratuity uses Basic + DA (Dearness Allowance). HRA, conveyance, medical, and special allowances are excluded. If your CTC has no separate DA component, use only the basic salary figure.
Is gratuity included in CTC?
Yes. Most Indian employers show gratuity in CTC at ~4.81% of basic annually (15 × basic monthly / 26 = monthly gratuity accrual). But you only receive it at separation after 5+ years — it is not part of monthly pay.
How many days notice can I adjust against gratuity?
Notice period and gratuity are separate calculations. You cannot use unpaid gratuity to offset notice period dues. Both are settled independently in your full & final settlement.
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