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₹2,88,461

Gratuity Calculator

100% Free

Calculate gratuity payable under the Payment of Gratuity Act, 1972 — with eligibility check and ₹20 lakh tax-exemption breakdown.

Real-time
Client-Side
Act Compliant

50 Thousand per month

Note: ≥ 6 months counts as 1 full year. Eligibility requires ≥ 5 years continuous service.

Gratuity Breakdown

Total Gratuity
₹ 2,88,461.54
Effective Years10 years
Formula(15 × ₹ 50,000 × 10) ÷ 26
Tax Exempt₹ 2,88,461.54
Taxable Portion₹ 0
💡 Tax Tip

Your entire gratuity is tax-exempt under Section 10(10) of the Income Tax Act.

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<iframe
  src="https://tools.town/embed/gratuity-calculator/"
  width="100%"
  height="600"
  style="border:none; border-radius:12px;"
  loading="lazy"
  title="Gratuity Calculator">
</iframe>

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How to Use

  1. 1 Choose whether your employer is covered under the Payment of Gratuity Act (most are)
  2. 2 Enter your last drawn monthly salary (Basic + DA only — not HRA, allowances)
  3. 3 Enter total years of continuous service
  4. 4 Add any extra months (≥ 6 months counts as a full year)
  5. 5 See gratuity amount, tax-exempt portion, and any taxable balance

Features

  • Both Act-covered (÷ 26) and not-covered (÷ 30) formulas
  • Automatic eligibility check (5-year minimum service)
  • ₹20 lakh tax-exemption cap applied per Section 10(10)
  • ≥ 6-month rounding rule built in
  • Indian numbering with Lakh/Crore words
  • 100% client-side — your salary data never leaves the browser

Why it Matters

Gratuity is a one-time lump-sum employers pay when you leave after 5+ years. The Act's formula is precise — get it wrong and you might shortchange yourself by lakhs. This calculator implements the exact (15 × salary × years) ÷ 26 formula used in the Payment of Gratuity Act, plus the post-2018 ₹20 lakh tax cap.

★★★★★

Use Cases

Resignation Planning

Know your gratuity before negotiating exit terms

Retirement Corpus

Add expected gratuity to your retirement plan

Tax Planning

Plan around the ₹20 lakh exemption cap if your gratuity is large

Frequently Asked Questions

Why divide by 26 and not 30?
The Payment of Gratuity Act assumes 26 working days per month (excluding 4 Sundays). Companies NOT covered under the Act use 30 — that's why we offer a toggle.
What counts as 'last drawn salary'?
Only Basic salary + Dearness Allowance (DA). HRA, special allowance, bonuses, and incentives are excluded from the gratuity formula.
Is gratuity taxable?
Up to ₹20 lakh (since 2018) is tax-exempt under Section 10(10). Anything above is added to your salary income for the year you receive it.
What if I leave before 5 years?
Generally not eligible — except in cases of death or permanent disability, where the 5-year minimum is waived.
Does the 5-year rule include notice period?
Yes. The Madras High Court ruled in 2018 that an employee with 4 years and 240 days qualifies as 5 years for gratuity purposes.
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Want to understand the math?

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How to Use Gratuity Calculator
gratuity

How to Use Gratuity Calculator — Complete Guide

Learn how to calculate your gratuity entitlement under the Payment of Gratuity Act using Tools.Town's free Gratuity Calculator.

8 May 2026

5 min read

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