Anvya AI · Free Tool
Calculate your gratuity amount, eligibility check, and tax exemption instantly
Include Dearness Allowance (DA) if applicable
What is gratuity and who is eligible?
Gratuity is a retirement benefit paid by an employer to an employee who has completed at least 5 years of continuous service. It is governed by the Payment of Gratuity Act, 1972 and applies to organisations with 10 or more employees.
What is the formula for calculating gratuity?
Gratuity = (Last drawn Basic salary + DA) × 15/26 × Number of completed years of service. The 15/26 factor represents 15 working days in a 26-working-day month. For employees not covered under the Gratuity Act, some employers use a different formula — check your HR policy.
Is gratuity taxable in India?
Gratuity received from a government employer is fully tax-exempt. For private sector employees covered under the Gratuity Act, gratuity is exempt up to ₹20 lakh (as of 2023). Any amount above ₹20 lakh is taxable as income in the year of receipt.
What happens to gratuity if I resign before completing 5 years?
Under the Gratuity Act, you lose the right to gratuity if you leave before 5 years of continuous service. However, some companies voluntarily pay pro-rated gratuity in the full-and-final settlement. Check your employment contract.
Can my employer deny gratuity payment?
No. Gratuity is a statutory right. Withholding it within 30 days of the due date makes the employer liable to pay with interest. Repeated non-payment is a criminal offence under the Act. You can file a complaint with the Controlling Authority (regional Labour Commissioner).
Does gratuity apply to contract and gig workers?
The Gratuity Act applies to employees with a formal employment relationship. Contract workers on third-party payrolls and gig workers (platform workers) are currently not covered under the Act. The proposed Code on Social Security aims to extend some benefits to gig workers.
| Feature | Anvya AI | HR portals (Zoho/Darwinbox) | Manual calculation |
|---|---|---|---|
| 5-year eligibility check built-in | ✓ | ✓ | ✗ |
| Tax exemption (₹20L limit) shown | ✓ | ✗ | ✗ |
| Completed-year vs. total-year distinction | ✓ | Partial | ✗ |
| Formula breakdown shown | ✓ | ✗ | ✓ |
| No login or company account needed | ✓ | ✗ | ✓ |
| Handles both Act-covered and non-covered employees | ✓ | Partial | ✓ |
| Free to use | ✓ | Partial | ✓ |
This free gratuity calculator helps employees in India calculate their gratuity entitlement based on the Payment of Gratuity Act, 1972. Enter your last drawn basic salary plus dearness allowance (DA), total years and months of service, and employee type to instantly see your gratuity amount, whether you are eligible, the tax-exempt portion, and any taxable amount. The calculator applies the standard 15/26 formula used by all Indian companies covered under the Gratuity Act.
Gratuity = (Last drawn Basic Salary + DA) × 15 ÷ 26 × Number of years of completed service. The factor 15 represents 15 working days per year, and 26 represents working days in a month.
You are eligible for gratuity if you have completed at least 5 years of continuous service with the same employer. For employees paid monthly, 4 years and 240 days (of the 5th year) is counted as 5 completed years.
As per the Payment of Gratuity Act 1972, the maximum gratuity payable is ₹20,00,000 (₹20 lakh). Any amount above this limit is taxable as income.
For private sector employees, gratuity up to ₹20 lakh is exempt from tax. The tax-exempt amount is the minimum of: (a) actual gratuity received, (b) last drawn salary × 15/26 × years, or (c) ₹20 lakh. For government employees, all gratuity is fully exempt.
Only fully completed years count for gratuity. If you have worked 7 years and 8 months, only 7 years count (unless the 6+ month rule applies). Fractions of a year beyond 6 months in the last partial year are counted as a full year for monthly-paid employees.