Gratuity = (15 × Last Salary × Years of Service) / 26
For employees covered under the Payment of Gratuity Act, 1972
Gratuity Calculation Results
Gratuity Amount
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Tax-Free Limit
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Taxable Amount
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Last Drawn Salary (Basic + DA)--
Effective Years of Service--
Divisor Used--
Formula Applied--
Total Gratuity Payable--
Gratuity Breakdown
Exemption Analysis
Tax on Gratuity Calculator
0%No tax
5%Up to 7L
20%7-10L
30%Above 10L
Tax Calculation on Gratuity
Actual Gratuity
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Exempt Amount
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Taxable Gratuity
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Tax Payable
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Exemption Calculation
Net Gratuity After Tax--
Tax vs Exempt Breakdown
Exemption Comparison
Gratuity Growth Projection
Projected Gratuity at Key Milestones
Year-wise Gratuity Projection
Year
Projected Salary
Gratuity Amount
Exemption Limit
Taxable Portion
Gratuity Growth Over Years
Year-wise Gratuity Projection
Important Information about Gratuity
Eligibility: Minimum 5 years of continuous service is required to claim gratuity under the Payment of Gratuity Act, 1972.
Exception: In case of death or disability of an employee, the 5-year minimum service condition is not required.
Maximum Limit: Tax-free gratuity limit is Rs 25 lakh for central/state government employees and Rs 20 lakh for private sector employees (as per current rules).
Nomination: Every employee must nominate a family member to receive gratuity in case of death. If no nomination, the gratuity is paid to the legal heir.
Forfeiture: Gratuity can be wholly or partially forfeited if the employee's services are terminated for any act of willful omission, negligence causing damage, or for riotous or disorderly conduct or any other act of violence.
Recent Amendments: The tax-free limit for gratuity was increased from Rs 10 lakh to Rs 20 lakh for private employees effective from 29th March 2018. Government employees enjoy a higher limit of Rs 25 lakh.
Payment Timeline: Employer must pay gratuity within 30 days from the date it becomes due. Delayed payment attracts simple interest at the rate notified by the Government.
Applicability: The Payment of Gratuity Act applies to every factory, mine, oilfield, plantation, port, railway, and every shop or establishment with 10 or more employees.