Gratuity

Gratuity is a lump-sum payment your employer gives you when you leave a job after at least 5 years of continuous service. It is governed by the Payment of Gratuity Act, 1972.

For employees covered by the Act, the calculation is:

Gratuity = Last drawn (basic + DA) × completed years × 15 / 26

Gratuity received by non-government employees covered by the Act is tax-exempt up to the lowest of: the actual amount, ₹20 lakh, or the amount computed by the 15/26 formula. Estimate yours with the Gratuity Calculator.