Calculate your gratuity amount based on service years
Gratuity is a lump sum benefit paid by employers to employees who have completed at least 5 years of continuous service. It's a thank-you payment for long service. The Payment of Gratuity Act applies to establishments with 10+ employees.
Gratuity = Last drawn salary × 15/26 × Years of service. Last drawn salary includes basic + DA. Each completed year counts; 6+ months round up to a year. Maximum gratuity is capped at ₹20 lakh under the Act, though companies may pay more.
For government employees, gratuity is fully tax-exempt. For private employees, the least of three is exempt: actual gratuity received, ₹20 lakh, or 15 days' salary × years of service. Any excess is taxable as income from salary.
Yes, gratuity can be forfeited partially or fully if termination is due to moral turpitude, riotous behavior, or willful damage to employer property. Resignation, retirement, or retrenchment doesn't affect gratuity eligibility after 5 years.
Legally, you're not entitled to gratuity under 5 years. However, some companies have policies to pay pro-rata gratuity. Also, in case of death or disability, the 5-year requirement is waived—full gratuity is payable regardless of tenure.
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