Gratuity Calculator
Calculate your gratuity eligibility and payout amount.
Frequently Asked Questions
What is Gratuity in India?
Gratuity is a monetary benefit given by an employer to an employee for services rendered to the organization, typically after 5 or more years of service.
What is the eligibility for receiving Gratuity?
An employee is usually eligible for gratuity after completing 5 years of continuous service with the same employer.
How is Gratuity calculated in India?
The formula is: `(15 x Last Drawn Salary x Tenure) / 26`. Here, 'Salary' includes Basic + DA, and 26 represents working days in a month.
Is there a limit on the maximum Gratuity amount?
Yes, as per current Indian labor laws, the maximum tax-free gratuity amount an employee can receive is ₹20 Lakhs.
Is Gratuity taxable?
Gratuity received by government employees is fully tax-exempt. For private-sector employees, it is exempt up to ₹20 Lakhs or the calculated amount, whichever is lower.
What happens to gratuity if an employee dies before 5 years?
In the case of death or disablement, the 5-year continuous service rule is waived, and gratuity is paid to the nominee or legal heir.
Does 'Salary' for gratuity include HRA or Bonus?
No. For gratuity calculation, only the Basic Salary and Dearness Allowance (DA) are considered. Allowances like HRA, LTA, and bonuses are excluded.
How many days are considered in a month for gratuity?
The law uses 26 days as the working days in a month, effectively excluding 4 Sundays.
Can I calculate gratuity if I am a contractor?
Gratuity usually applies to 'employees'. If you are on a consultant or contract basis, it depends on your specific contract and the nature of your engagement.
Is gratuity mandatory for all companies?
It is mandatory for any establishment (factory, mine, oilfield, plantation, port, railway, shop, or establishment) with 10 or more employees.