Reviewed by Artha Research·Last updated 8 April 2026
Gratuity Calculator
Calculate the gratuity you're owed at separation under the Payment of Gratuity Act, with tax exemption included.
Your service details
Enter your last drawn basic + DA and total years of service to estimate gratuity.
Gratuity at separation
₹3.5L
₹3.5L gratuity
(Last drawn basic × 15 × years of service) / 26
Gratuity lands tax-free up to ₹20L. Plan how you'll deploy it.
Gratuity amount
₹3.5L
Years counted
10 yrs
Tax-exempt portion
₹3.5L
Taxable portion
₹0
Full gratuity is tax-free
Your entire gratuity stays below the ₹20L Section 10(10) exemption — it lands in your account tax-free.
Next best actions
The result hints at what to look at next. Each link carries your current numbers so you never re-enter them.
At a glance
- What it does
- Computes gratuity entitlement at separation under the Payment of Gratuity Act (for covered employees) or the alternative 30-day method.
- Formula
- Covered: (last basic × 15 × years) ÷ 26. Not covered: (last basic × 15 × years) ÷ 30.
- Tax exemption
- Up to ₹20L is exempt under Section 10(10). Gratuity above ₹20L is added to taxable income in the year you receive it.
- Eligibility
- Minimum 5 years of continuous service with the same employer. Years above 6 months round up in the final year.
How It Works
This is the drill-down layer. The flagship flow leads with a recommendation, and this page lets you inspect the underlying model.
- Covered under the Act: Gratuity = (Last drawn basic + DA) × 15 × years of service / 26.
- Not covered under the Act: Gratuity = (Last drawn basic + DA) × 15 × years of service / 30.
- Tax exemption under Section 10(10) = minimum of: actual gratuity, ₹20L, and (basic × 15 × years) / 26.
Assumptions
The recommendation stays blunt, but the assumptions remain visible.
- Minimum 5 years of continuous service is required under the Gratuity Act.
- Years above 6 months in the final year round up (e.g., 7.6 years counts as 8).
- Section 10(10) tax exemption is capped at ₹20L for private sector employees.
FAQ
The follow-up questions people usually ask after the main recommendation is already clear.
When am I eligible for gratuity?
After completing 5 years of continuous service with the same employer. Some courts have accepted 4 years 240 days; safest to assume 5 years.
Is gratuity tax-free?
Yes, up to ₹20L under Section 10(10) for private sector employees. Anything above that gets added to your taxable income in the year you receive it.
Does gratuity apply to contract employees?
Usually not — the Payment of Gratuity Act covers regular employees of establishments with 10+ workers. Contract and consulting arrangements typically don't attract gratuity.
Sources & references
Every formula and assumption above is grounded in these authoritative sources.
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