Gratuity is a lump-sum amount paid by an employer to an employee who has completed at least five years of continuous service, as mandated by the Payment of Gratuity Act, 1972. It serves as a financial reward for long-term service and loyalty.

Any employee working in a factory, mine, oil field, plantation, port, railway company, shop, or other establishment with 10 or more employees is eligible after five years of continuous service. In case of death or disability, the five-year requirement may not apply.

A common formula is: (Basic Salary + DA) × 15 × (Years of Service) ÷ 26. Our Gratuity Calculator streamlines this process, taking into account different salary structures and service durations to estimate your eligibility amount.

For government employees, gratuity is fully tax-free. For non-government employees, it is tax-exempt up to a certain limit (currently ₹20 Lakhs) under the Income Tax Act. Amounts exceeding that limit become taxable.

Yes. As of now, the maximum tax-free gratuity limit is set at ₹20 Lakhs. If your calculated gratuity goes beyond this limit, the excess amount may be taxed according to prevailing income tax rules.

Generally, no. You must have five years of continuous service to qualify for gratuity. Exceptions include events like death or permanent disability, where gratuity becomes payable regardless of length of service.

Continuous service usually means uninterrupted service over five years. Minor interruptions like sanctioned leave or suspensions resolved in the employee's favor typically do not break continuity.

Yes. Gratuity is typically calculated based on your last drawn basic salary plus DA. If these components rise, your gratuity amount may also increase, provided you meet the required service period.

A Gratuity Calculator helps you quickly estimate your potential gratuity payout. It factors in basic salary changes, length of service, and applicable tax rules, giving you a clearer picture of your retirement or resignation benefits.

For private sector employees, gratuity is calculated as: (Last drawn Basic Salary + Dearness Allowance) × 15/26 × Years of Service. For example, with a basic salary of ₹50,000, DA of ₹5,000, and 10 years of service, the gratuity amount would be (₹55,000 × 15/26 × 10) = ₹3,17,307. Our calculator automates this calculation for you.

According to the Payment of Gratuity Act, employers must pay gratuity within 30 days from the date it becomes payable (usually the date of resignation/retirement). Delayed payments may attract an interest rate of 10% per annum. If the delay is unjustified, the employer might face a penalty of up to ₹20,000 and/or imprisonment up to one year.

Contract employees are eligible for gratuity if they have completed 5 years of continuous service with the same employer, regardless of contract renewals. The Employment Act defines a contract employee working continuously if they have worked for 240 days in a year. Our calculator helps contract employees verify their gratuity entitlement based on their specific employment terms.

The gratuity formula is: (Basic Salary + DA) × 15/26 × Years of Service. Example 1: For ₹30,000 basic salary and 7 years service: ₹30,000 × 15/26 × 7 = ₹1,21,153. Example 2: For ₹75,000 basic salary and 15 years service: ₹75,000 × 15/26 × 15 = ₹6,49,038. Our calculator instantly performs these calculations with your specific inputs.

In 2025, gratuity is tax-exempt up to ₹20 lakhs. Any amount exceeding this limit is added to your income and taxed at your income tax slab rate. For example, if you receive ₹25 lakhs as gratuity, only ₹5 lakhs (₹25 lakhs - ₹20 lakhs) will be taxable. For government employees, the entire gratuity amount remains tax-free regardless of the amount.

Gratuity is payable on resignation, retirement, termination, or death, provided you've completed 5 years of continuous service (except in cases of death or disability). Whether you voluntarily resign or retire at superannuation, your gratuity rights remain protected under the Payment of Gratuity Act, 1972, as long as you meet the service requirement.

To claim unpaid gratuity: 1) Send a formal demand letter to your ex-employer, 2) If no response within 30 days, file an application with the Controlling Authority (usually Labor Commissioner) in Form-I, 3) Submit supporting documents including service certificate and salary slips. You can file this claim within 12 months of gratuity becoming due, with possible extension to 3 years in justified cases.

Gratuity is a lump-sum payment from employers after 5+ years of service, calculated based on your final salary. Provident Fund (PF) is a monthly contribution from both employee (12% of basic) and employer, accumulated throughout employment. Gratuity is mandated only for companies with 10+ employees, while PF applies to establishments with 20+ employees. PF can be withdrawn before 5 years of service in certain conditions, unlike gratuity.

Part-time employees are eligible for gratuity if they've completed 5 years of continuous service. The calculation remains the same: (Last drawn Basic Salary + DA) × 15/26 × Years of Service. However, the basic salary is proportional to working hours. For example, a part-time employee working 4 hours daily with ₹15,000 monthly basic salary for 8 years would receive: ₹15,000 × 15/26 × 8 = ₹69,230.

Key gratuity rule updates for 2025 include: 1) The tax-free limit remains at ₹20 lakhs, 2) Fixed-term contract employees (even under 5 years) now eligible for pro-rata gratuity, 3) Digital gratuity payments mandatory for organized sector employers, 4) Universal Account Number (UAN) integration for gratuity tracking, 5) Reduced processing time requirement (15 days from 30). Our calculator incorporates these latest provisions.

Gratuity is calculated only on Basic Salary + Dearness Allowance, not on full CTC (Cost to Company). Other components like HRA, conveyance, medical allowance, and bonuses are excluded from gratuity calculations. For example, if your CTC is ₹10 lakhs but basic salary is ₹5 lakhs, gratuity will be calculated only on the ₹5 lakhs (plus any DA). Our calculator helps segregate these components for accurate estimation.

For IT employees, gratuity calculation follows the standard formula: (Last drawn Basic Salary + DA) × 15/26 × Years of Service. Most IT companies structure salary with basic as 40-50% of CTC. For example, an IT professional with ₹80,000 basic salary and 8 years of service would receive: ₹80,000 × 15/26 × 8 = ₹3,69,230. Our calculator is particularly useful for IT professionals with complex salary structures.

If an employee dies before completing 5 years of service, the statutory gratuity becomes payable to nominees/legal heirs regardless of the service duration. The calculation remains the same: (Last drawn Basic Salary + DA) × 15/26 × Actual Service Period (even if less than 5 years). For example, for an employee with 3 years service and ₹40,000 basic salary, the family would receive: ₹40,000 × 15/26 × 3 = ₹69,230.

Legally, gratuity is not payable for service less than 5 years except in cases of death or disability. However, some progressive employers offer pro-rata gratuity for shorter tenures as a goodwill gesture. Our calculator can estimate this pro-rata amount, though it's important to verify your company's policy. If you're leaving before 5 years, check your appointment letter or HR policies for any special provisions.

Gratuity is a one-time lump sum payment at employment end, requiring 5+ years of service with the same employer. Pension is a recurring monthly payment after retirement, typically from schemes like EPF Pension, NPS, or government pensions. Gratuity is calculated based on last drawn salary, while pension depends on contribution amount and duration. Both provide financial security but serve different purposes in your retirement planning.

No, don't include bonuses when using our gratuity calculator. Gratuity calculation considers only Basic Salary plus Dearness Allowance. Performance bonuses, incentives, overtime pay, commissions, and other special allowances are excluded from the calculation as per the Payment of Gratuity Act. Enter only your basic salary (and DA if applicable) for accurate gratuity estimation.

There is no statutory minimum gratuity amount specified in the Payment of Gratuity Act. The gratuity amount depends entirely on your basic salary, years of service, and the standard formula. For example, an employee with minimal wage of ₹15,000 basic salary serving for 5 years would receive approximately ₹43,269 (₹15,000 × 15/26 × 5). Our calculator provides accurate estimates regardless of salary level.

Our online gratuity calculator for India handles incomplete years by calculating the exact service duration. For periods exceeding 6 months, it's rounded up to a full year; less than 6 months is counted proportionally. For example, 7 years and 8 months counts as 8 years, while 10 years and 4 months is calculated as 10.33 years. This ensures you receive accurate gratuity estimation based on your precise service duration.

Gratuity is legally mandatory only for establishments with 10 or more employees. If you work in a startup or small company with fewer than 10 employees, gratuity payment is not statutorily required. However, some small employers voluntarily offer gratuity as a benefit. Our calculator can help employees of any company size estimate potential gratuity, but verify your specific company policy for confirmation.

With ₹50,000 basic salary and 20 years of service, your gratuity amount would be approximately ₹5,76,923. Calculation: ₹50,000 × 15/26 × 20 = ₹5,76,923. This represents a significant retirement benefit for long-term service. Our calculator can instantly compute various scenarios with different salary and service period combinations to help plan your long-term financial goals.

Employers cannot legally refuse to pay gratuity if you meet the eligibility criteria. Delaying payment beyond 30 days attracts 10% annual interest. If an employer wrongfully refuses payment, file a complaint with the Controlling Authority (Labor Commissioner). Employers can only withhold gratuity in rare cases of property damage or theft by the employee, and that too only to the extent of the damage value.