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Finance / India Tax
Estimate the gratuity payable to you under the Payment of Gratuity Act, 1972, and how much of it is tax-exempt.
Under the Payment of Gratuity Act, 1972, gratuity = 15/26 × last-drawn monthly salary (basic + DA) × completed years of service — the '15/26' comes from 15 days' pay for every year, where a working month is treated as 26 days. On the tax side, gratuity received by a non-government employee is exempt under Section 10(10) up to a ceiling of ₹20,00,000 (raised via a March 2018 notification and still current); any amount above that ceiling is taxable. Simplifications stated explicitly: years of service is used as entered without separately rounding a part-year of 6+ months up to a full year, as some employer policies do; this models non-government-employee rules (government employees receive full exemption with no ceiling, which this calculator does not model); and figures reflect FY 2025-26 rules for the exemption ceiling.
Yes — the Payment of Gratuity Act generally requires 5 years of continuous service before gratuity becomes payable (with some exceptions, such as death or disability). This calculator computes the gratuity amount for the years you enter but doesn't separately enforce that eligibility threshold.
For non-government employees, gratuity is exempt under Section 10(10) only up to ₹20,00,000 in aggregate over your career. Amounts above that are taxed as salary income in the year received. Government employees get a full exemption with no ceiling, which this calculator doesn't model.
Basic pay plus dearness allowance (DA) only — not your full CTC, and not allowances like HRA or bonuses, which the statutory formula excludes.