Use Basic + Dearness Allowance. Do not include HRA or other allowances.
6+ months rounds up to next year as per the Gratuity Act.
What is Gratuity and When Are You Eligible?
Gratuity Amount Quick Reference
| Monthly Basic | 5 years | 10 years | 15 years | 20 years |
|---|---|---|---|---|
| ₹20,000 | ₹57,692 | ₹1,15,385 | ₹1,73,077 | ₹2,30,769 |
| ₹30,000 | ₹86,538 | ₹1,73,077 | ₹2,59,615 | ₹3,46,154 |
| ₹50,000 | ₹1,44,231 | ₹2,88,462 | ₹4,32,692 | ₹5,76,923 |
| ₹1,00,000 | ₹2,88,462 | ₹5,76,923 | ₹8,65,385 | ₹11,53,846 |
Key Gratuity Rules
| Rule | Detail |
|---|---|
| Formula | (Basic × 15 × Years) ÷ 26 |
| Minimum service | 5 years (4yr 240 days counts as 5) |
| Maximum tax-exempt | ₹20 lakh |
| 6-month rule | Service of 6+ months in last year rounds up |
| Payable when | Resignation, retirement, death, or disablement |
Gratuity Formula — Payment of Gratuity Act
Where: Basic Salary = last drawn basic + dearness allowance. 15 = half month's salary per year. 26 = working days in a month (statutory — not 30 or 31).
Rounding Rule
If additional months ≥ 6, round up to next full year. So 10 years 7 months = 11 years for calculation. 10 years 4 months = 10 years.
Example — ₹50,000 basic, 10 years
Gratuity = (50,000 × 15 × 10) ÷ 26 = ₹7,500,000 ÷ 26 = ₹2,88,462. Fully tax-free as it is under ₹20 lakh limit.
Example Calculation
Frequently Asked Questions
Gratuity = (Basic × 15 × 5) ÷ 26. For ₹30,000 basic: (30,000 × 15 × 5) ÷ 26 = ₹86,538. For ₹50,000 basic: ₹1,44,231.
No — you need minimum 5 years of continuous service. However, 4 years and 240 days (approximately 4 years 8 months) qualifies as 5 years due to the rounding rule for the final year.
Up to ₹20 lakh is tax-exempt for private sector employees. Amount above ₹20 lakh is taxable. Government employees get full gratuity tax-free.
You can file a complaint with the Controlling Authority under the Payment of Gratuity Act in your area. The employer is legally liable to pay within 30 days of the due date with interest for delays.
Yes — most companies include employer gratuity provision (4.81% of basic) in CTC. It is not deducted from your salary — it is an additional employer expense that accumulates over your service period.
Related Calculators
Disclaimer: Results are for informational and educational purposes only — not financial, tax, or legal advice. Tax slabs, rates (EPF, PPF, home loan), and rules shown are based on data available in 2025 and may change. Always verify with a qualified professional or official government sources before making financial decisions.