MoneyDock

Gratuity Calculator

Estimate the gratuity amount you are eligible to receive after 5 years.

₹
Yr

*Minimum 5 years required for eligibility.

Gratuity Payable₹ 144,231
Tax Exempt Amount₹ 144,231

Gratuity is a monetary benefit given by an employer to an employee as a token of appreciation for their services. In India, it is mandatory for organizations with 10 or more employees to pay gratuity if an employee has completed 5 continuous years of service.

📐 The Gratuity Formula

Gratuity = (15 × Last Drawn Salary × Tenure) / 26

  • 15: Wages for 15 days per year of service.
  • Last Drawn Salary: Basic Salary + Dearness Allowance (DA).
  • 26: Number of working days in a month.

Tax Exemption Limit (2025 Update)

The government has significantly increased the tax-free gratuity limit to ₹20 Lakhs for private sector employees. For government employees, the entire amount is tax-free regardless of the limit.

Important Rules

  • The 5-Year Rule: You must complete 4 years and 240 days (in a 6-day work week) to be eligible. This is rounded off to 5 years.
  • Rounding Off Tenure: If you work for 7 years and 7 months, it is rounded up to 8 years. If you work for 7 years and 4 months, it is rounded down to 7 years.
  • Death/Disability: In case of death or disablement, the 5-year service rule is waived off. The nominee receives the gratuity amount.

Frequently Asked Questions

Is 5 years mandatory for Gratuity?

Yes, for resignation or retirement. However, in case of death or disablement of the employee, the 5-year condition is not applicable.

Is Gratuity part of CTC?

Yes, most companies include the gratuity provision in your Cost to Company (CTC) structure, but it is paid out only on exit.

Is Gratuity taxable?

It is tax-free up to ₹20 Lakhs. Any amount received above this limit is taxed as per your income tax slab.

Can an employer refuse to pay gratuity?

No. If the company is covered under the Payment of Gratuity Act and you are eligible, it is a statutory right. Non-payment is a legal offense.

Does gratuity depend on performance?

No. It is purely based on your last drawn salary and the number of years you served the company.