Gratuity Calculator
Calculate gratuity amount as per Payment of Gratuity Act.
Employment Details
₹
Yrs
Minimum 5 years of continuous service required for gratuity.
Months
Gratuity Amount
₹0
Last Drawn Salary—
Completed Years—
Formula Used—
Tax Exemption Limit₹20,00,000
Taxable Gratuity₹0
The Finzorio Gratuity Calculator computes tax-free severance and retirement gratuity payouts under the Payment of Gratuity Act, 1972 for Indian employees.
Gratuity Eligibility & Legal Formula
Gratuity is a lump-sum financial reward paid by employers to workers who complete at least 5 years of continuous service in an organization.
Payment of Gratuity Act Formula
Gratuity Amount = (Last Drawn Basic Pay + DA) × (15 / 26) × Tenure in Years
- 15 = 15 days of wages for every completed year
- 26 = Total working days in a month (excluding 4 Sundays)
- Tenure = Completed service years (service > 6 months rounded up to next full year)
Income Tax Exemption Limits on Gratuity
- Government Employees: Gratuity received by central/state government employees is 100% tax-exempt.
- Private Sector Employees: Gratuity is tax-exempt up to a lifetime ceiling of ₹20,00,000 (₹20 Lakh).
Worked Example: 15-Year Private Sector Gratuity
Inputs: Last drawn Basic + DA = ₹80,000/mo, Service Tenure = 14 Years and 8 Months (rounded to 15 years).
• Formula = 80,000 × (15 / 26) × 15
• Calculated Tax-Free Gratuity Payout = ₹6,92,308.
Frequently Asked Questions
Yes, 5 years continuous service is mandatory, except in cases of employee death or permanent disablement where the 5-year condition is waived.