Calculate your gratuity entitlement under the Payment of Gratuity Act, 1972
Gratuity Calculation
Monthly Salary₹0
Years Counted (with rounding)0
Gratuity Amount₹0
Tax Exempt (up to ₹20L)₹0
Taxable Portion (if any)₹0
Tax Treatment
Gratuity received up to ₹20 lakh (₹20,00,000) is exempt from income tax for employees covered under the Gratuity Act.If the gratuity amount exceeds this threshold, the excess is taxable at your applicable income tax slab. This exemption applies even if gratuity is received in a single financial year.
About Gratuity
Gratuity is a benefit provided to employees under thePayment of Gratuity Act, 1972. It's a lump-sum payment made by employers to employees who complete a minimum of 5 years of continuous service upon retirement, resignation, or termination.
Eligibility Criteria:
Continuous service of 5 years or more
Applies to private sector employees, government employees, and certain other sectors
Maximum gratuity capped at ₹20,00,000 for covered employees
Employees who have completed 5 or more years of continuous service are entitled to gratuity. This includes employees in the private sector, government, and other covered establishments. Employees who are covered under the Gratuity Act are eligible for the higher formula (÷26), while those not covered follow the ÷30 formula.
Can gratuity be forfeited?+
Gratuity can only be forfeited in specific cases: (1) if the employee is dismissed on grounds of misconduct, (2) if resignation is without giving notice, or (3) in other circumstances as specified in the Act. In cases of retirement or normal resignation with notice, gratuity cannot be forfeited.
Is gratuity compulsory for all employers?+
Gratuity is compulsory for establishments employing 10 or more employees under the Payment of Gratuity Act, 1972. However, employers can provide gratuity voluntarily for smaller establishments. Some sectors and government departments have their own rules and may provide gratuity even for fewer employees.
How is gratuity taxed?+
Gratuity up to ₹20 lakh is fully exempt from income tax if you're covered under the Gratuity Act. If the gratuity amount exceeds ₹20 lakh, the excess portion is taxable as per your applicable income tax slab. The exemption is available even if received in a single financial year.
Need Expert Compliance Help?
Talk to a CA or CS today. Free consultation. All-inclusive pricing — no hidden fees.
✅
We'll call you within 30 minutes!
Our expert will contact you shortly.
🔒 Your data is secure. We never share your information.