Gratuity Calculator India
Private · Govt · Seasonal Employees

For Act-covered employees: Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26. The divisor 26 represents working days in a month (excluding 4 Sundays). For non-covered employees: ÷ 30 is used. For seasonal workers: 7 days per season year instead of 15.

The maximum gratuity payable under the Payment of Gratuity Act is ₹20,00,000 (₹20 Lakhs), revised in 2018. Any amount paid above this limit is at the employer's discretion and would be taxable. The government periodically revises this ceiling.

Gratuity is tax-exempt under Section 10(10) of the Income Tax Act up to ₹20 lakhs for private sector employees covered under the Gratuity Act, and fully exempt for government employees. Any amount exceeding the exempt limit is added to income and taxed at the applicable slab rate.

Generally, no — 5 continuous years of service is mandatory. However, there are two exceptions: (1) Death of the employee — gratuity is paid to nominee/legal heirs regardless of service duration, and (2) Permanent total disablement — gratuity is payable immediately. Some employers voluntarily pay gratuity for lesser service as an ex-gratia payment.

If an employee has completed more than 6 months in the last year of service, it is rounded up to the next full year for gratuity calculation. For example, 7 years and 8 months = 8 years for the purpose of calculation. If less than 6 months, it is ignored. This is per EPFO and Supreme Court interpretation of the Act.

Gratuity is payable even on termination after 5 years of service, unless the termination is due to an act of willful omission or negligence causing damage or loss to the employer, or acts of violence, riotous or disorderly behaviour. The employer must pay within 30 days — delay attracts simple interest at the rate notified by the government.