Calculate your exact gratuity amount using the Payment of Gratuity Act formula. Includes tax exemption limit and both government & private employee formulas.
Gratuity is calculated using different formulas depending on whether the employer is covered under the Payment of Gratuity Act, 1972 or not.
| Employee Type | Formula | Notes |
|---|---|---|
| Covered by Act (Private) | (Basic+DA) × 15/26 × Years | 6+ months rounds up to next year. Max ₹20L tax-free. |
| Not Covered by Act | (Basic+DA) × 15/30 × Years | No rounding. More conservative formula. |
| Government Employees | (Basic+DA) × 15/30 × Years (max ₹25L tax-free) | Higher tax exemption limit for govt employees. |
Any employee who has completed 5 years of continuous service with the same employer is eligible for gratuity. Exception: In case of death or disability, gratuity is payable even before 5 years.
The tax-free gratuity limit for private sector employees is ₹20 Lakh (increased from ₹10L in recent years). Government employees enjoy a higher limit of ₹25 Lakh. Amount above the limit is taxable as per your income tax slab.
Gratuity must be paid within 30 days of becoming due. It is payable on: retirement, resignation (after 5 years), death, disability, or layoff. Your employer cannot withhold gratuity without valid legal reason.