Retirement Gratuity Calculator
Estimate your retirement gratuity benefit based on your last drawn salary and years of service.
Gratuity Details
* Service > 6 months is counted as a full year
Enter details & Click Calculate
How is Gratuity Calculated?
For government employees covered under the Payment of Gratuity Act, the formula is:
- Last Drawn Salary: Basic Pay + Dearness Allowance (DA).
- 15/26: Represents 15 days of salary for every completed year of service, calculated on a 26-day working month.
- Years of Service: Service of more than 6 months in the last year is considered as a full year.
- Max Limit: The maximum tax-exempt gratuity limit is currently ₹20 Lakhs.
Gratuity Estimator
Basic Pay: ₹56,100 | Service: 20 Years
Generated on 25 March 2026
This is an estimate based on current rules and projections. Actual values may vary.
Generated by DesiSalary.com
How is Gratuity Calculated?
Gratuity is a lump sum benefit paid by an employer to an employee upon leaving the job, provided they have completed at least 5 years of continuous service.
The Formula (Covered under Gratuity Act)
G = (15 × Last Drawn Salary × N) / 26
Where:
15: Wages for 15 days per year.
Last Salary: Basic Pay + DA.
N: Number of completed years of service.
26: Working days in a month (excluding Sundays).
Common Questions
When am I eligible?
You qualify for gratuity only after completing 5 continuous years of service with the same employer. (Exception: In case of death or disablement, the 5-year rule is waived).
Is Gratuity Tax-Free?
For government employees, the entire amount is tax-free. For private sector employees (covered under the Act), the least of the following is tax-exempt:
- Actual gratuity received.
- ₹20 Lakhs (Lifetime limit).
- Calculate amount using the 15/26 formula.
How is 'Service Years' rounded?
Any service duration exceeding 6 months is rounded up to the next year.
Example: 7 years and 7 months = 8 years. 7 years and 4 months = 7 years.
Key Rules for Gratuity
| Parameter | Rule / Limit |
|---|---|
| Max Exemption Limit | ₹20 Lakhs |
| Days Calculation | 15 days per year, month considered as 26 days |
| Rounding of Years | Service > 6 months is rounded to next year |
Frequently Asked Questions
How is Gratuity calculated for Govt Employees?
It is calculated using the formula: (15 × Last Drawn Salary × Years of Service) / 26. Here, 'Last Drawn Salary' includes Basic Pay plus Dearness Allowance (DA).
What is the maximum tax-exempt Gratuity limit?
As per current 7th CPC rules, the maximum tax-exempt gratuity limit is ₹20 Lakhs. Any amount received above this limit is taxable.
Is Gratuity taxable?
For government employees, gratuity is fully tax-exempt u/s 10(10)(i). For non-government employees covered by the Payment of Gratuity Act, it is tax-exempt up to ₹20 Lakhs u/s 10(10)(ii).
Can I get gratuity before 5 years?
Generally no. However, the 5-year continuous service rule is waived in case of death or disablement of the employee.
Will the limit increase to ₹25 Lakhs?
There is a provision to increase the limit by 25% (to ₹25 Lakhs) when DA crosses 50%. However, this requires a specific government notification, which hasn't been issued yet. The limit currently stands at ₹20 Lakhs.
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