Gratuity up to ₹20 lakh is tax-free for private employees covered under the Act. Government employees' gratuity is fully exempt.

Does 4 years 8 months qualify?

Legally the Act requires 5 years, though some courts have treated 4 years 240 days as qualifying. Most employers follow the strict 5-year rule.

Gratuity Calculator India

Gratuity is a lump sum your employer pays when you leave after at least five years. It depends only on your last basic + DA and years served.

Indicative estimate. This result depends on government rates that are still pending verification against the official notification. Confirm the exact amount with the relevant department before paying.

Gratuity amount

₹3,17,308

Years counted: 11 years
Tax-exempt portion: ₹3,17,308
Taxable portion: ₹0

Formula

Gratuity = (15 ÷ 26) × Last drawn basic + DA × Years of service. Service beyond 6 months in the final year counts as a full year.

Worked example

Basic + DA ₹50,000 and 10 years 7 months of service → 11 years → gratuity = 15/26 × 50,000 × 11 = ₹3,17,308.

Assumptions

Private-sector cap of ₹20 lakh on tax-free gratuity.
Employers not covered by the Act use a 30-day month, i.e. half a month's salary per year.

Frequently asked questions

Is gratuity taxable?: Gratuity up to ₹20 lakh is tax-free for private employees covered under the Act. Government employees' gratuity is fully exempt.
Does 4 years 8 months qualify?: Legally the Act requires 5 years, though some courts have treated 4 years 240 days as qualifying. Most employers follow the strict 5-year rule.

Rules used: Payment of Gratuity Act, 1972. Last reviewed 2026-10-31.

These rates are pending verification against official sources. Confirm with the relevant department before relying on the figure.

Ministry of Labour and Employment

Last reviewed 2026-10-31. Results are estimates for information only and do not constitute financial, tax or legal advice.