Gratuity Calculator India 2026

Any employee who has completed at least 5 years of continuous service with the same employer is eligible for gratuity. The Payment of Gratuity Act, 1972 applies to factories, mines, oilfields, plantations, ports, railway companies, and shops/establishments with 10 or more employees. Contract workers, apprentices, and trainees may not be covered. Exception: The 5-year requirement is waived in case of death or permanent disability.

For employees covered under the Payment of Gratuity Act: Gratuity = (Last drawn Basic + DA × 15 × Years of service) / 26. For those NOT covered by the Act: Gratuity = (Last drawn Basic + DA × 15 × Years of service) / 30. The divisor 26 represents working days in a month (excluding 4 Sundays). Example: ₹50,000 Basic+DA × 15 × 10 years / 26 = ₹2,88,462.

The maximum tax-exempt gratuity amount for private sector employees is ₹20 Lakhs (revised in 2018 from ₹10L). The least of three is exempt: (1) Actual gratuity received, (2) 15 days' salary per year of service (as per formula), (3) ₹20 Lakhs. Any amount above ₹20L is added to your taxable income. Government employees enjoy 100% tax exemption with no upper limit.

For gratuity calculation, if the service period exceeds 6 months in the last year, it is rounded up to the next full year. So 5 years 7 months = 6 years for gratuity calculation, and 5 years 4 months = 5 years. Example: At ₹40,000 Basic+DA with 5 years 8 months service (treated as 6 years): Gratuity = 40,000 × 15 × 6 / 26 = ₹1,38,462.

Yes, but only under specific conditions. An employer can forfeit gratuity (wholly or partially) if services are terminated due to: riotous or disorderly conduct, an act involving violence or moral turpitude, or damage to property of the employer. However, for ordinary resignation, retirement, or layoffs after 5 years of service, the employer CANNOT withhold gratuity. Filing a complaint with the Labour Commissioner is the remedy if an employer wrongfully refuses.

In case of an employee's death, gratuity is payable to the nominee (as per Form F nomination). If no nomination exists, it's paid to legal heirs. Crucially, the 5-year minimum service requirement does NOT apply in case of death or permanent disability — gratuity is payable even for just 1-2 years of service. The gratuity payable in case of death is also exempt from income tax in the hands of the nominee/heir.

As per the Payment of Gratuity Act, employers must pay gratuity within 30 days of the gratuity becoming payable (i.e., within 30 days of separation/retirement/death). If the employer fails to pay within 30 days, they must also pay simple interest at the rate prescribed by the government (currently 10% p.a.) from the due date to the date of actual payment.

Employees must fill Form 'F' (Nomination Form) within 30 days of completing one year of service. For employees with family, only family members can be nominees. Single employees can nominate any person, but must change the nominee to a family member upon getting married. You can modify the nomination anytime using Form 'F'. If no nomination exists, gratuity goes to legal heirs as per succession laws.

Yes, the Payment of Gratuity Act applies regardless of salary level. There is no maximum salary cap for coverage. However, the maximum tax-exempt gratuity is capped at ₹20 Lakhs. For very high-salary employees, a significant portion of gratuity may be taxable. Some employers offer enhanced gratuity through 'group gratuity schemes' to attract and retain senior executives.

No, gratuity is generally not transferable between employers. Each employment is treated separately. You are eligible for gratuity from Employer A after 5 years with A, and separately from Employer B after 5 years with B. The service periods don't add up. Exception: If your employment is transferred (company acquisition, government transfer, etc.), the prior service period may be considered for gratuity eligibility.