Calculate your gratuity amount under the Payment of Gratuity Act, 1972, and see how much is tax-exempt.
Gratuity = (Basic + DA) × 15 ÷ 26 × Years of Service
The "15" represents 15 days' wages for every completed year of service, and "26" represents the number of working days the Act assumes in a month (excluding Sundays). The statutory maximum gratuity payable is capped at ₹20 lakh, and this same ₹20 lakh figure is also the maximum tax-exempt amount under Section 10(10) of the Income Tax Act for private-sector employees.
You generally need at least 5 years of continuous service with the same employer for resignation or retirement. This requirement is waived in case of death or disablement due to accident or disease.
If your service in the final year exceeds 6 months, it is rounded up to the next full year. For example, 10 years and 7 months becomes 11 years; 10 years and 4 months remains 10 years.
For private sector employees covered under the Payment of Gratuity Act, gratuity is tax-exempt up to ₹20 lakh under Section 10(10) of the Income Tax Act. Any amount above ₹20 lakh is taxable as salary income. This ₹20 lakh limit is a lifetime cap across all employers. Government employees are fully exempt with no cap.
Only Basic Salary and Dearness Allowance (DA) are included — HRA, conveyance, special allowances, bonus, and other CTC components are excluded from the calculation.
The 15/26 formula applies to employers covered under the Payment of Gratuity Act (establishments with 10 or more employees). Employers not covered by the Act sometimes use a similar but slightly different formula with a 30-day divisor instead of 26, which produces a smaller gratuity amount.
Gratuity is a statutory lump-sum benefit your employer pays as recognition for long-term service, typically becoming payable after 5 years of continuous employment. This calculator applies the standard 15/26 formula used by employers covered under the Payment of Gratuity Act, and shows how much of your gratuity would be tax-exempt under current rules.
Note: this calculator is for illustration only. Your actual entitlement depends on your specific employment terms and applicable labour law — consult your HR department or a labour law professional for your final calculation.
