Gratuity Calculator India 2026

For covered employees (companies with 10+ employees), gratuity = (15/26) × Last Drawn Salary (Basic + DA) × Years of Service. For non-covered employees, gratuity = (15/30) × Salary × Years. The maximum gratuity payable is capped at ₹20,00,000 under the Payment of Gratuity Act.

Any employee who has completed at least 5 years of continuous service with the same employer is eligible for gratuity. The 5-year minimum is waived in case of death or disability, and fixed-term employees qualify after 1 year of continuous service under the Code on Social Security, 2020 (in force from 21 November 2025). The employer must have 10 or more employees to be covered under the Payment of Gratuity Act.

For private sector employees, the exemption under Section 10(10) is the least of three amounts: (1) the statutory ceiling of ₹20,00,000, (2) the gratuity actually received, and (3) the amount payable under the statutory formula (15/26 × last drawn salary × completed years for covered employees). So if the formula amount is below ₹20L, only that formula amount is exempt. Government employees receive 100% exemption. Any gratuity above the exempt amount is taxable as per your applicable income tax slab.

If you resign before completing 5 years of continuous service, you are not eligible for gratuity under the Payment of Gratuity Act. However, some employers may voluntarily pay an ex gratia amount. The only exceptions are death or disability, where the 5-year requirement is waived.

Yes, but the employer may have the right to forfeit gratuity in whole or in part in case of termination due to misconduct involving moral turpitude, riotous behavior, or willful damage. However, courts have held that gratuity forfeiture must be reasonable and proportionate to the loss caused.