Gratuity Calculator

Gratuity is a retirement benefit paid by employers to employees as a token of appreciation for their long service. Under the Payment of Gratuity Act, 1972, employees who have completed at least 5 years of continuous service are entitled to receive gratuity.

Gratuity Formula

For employees covered under the Gratuity Act:

Gratuity = (Last Basic + DA × 15 × Years of Service) / 26

For employees not covered under the Gratuity Act:

Gratuity = (Last Basic + DA × 15 × Years of Service) / 30

Tax Exemption on Gratuity

Gratuity received from a government employer is fully exempt from income tax. For private sector employees covered under the Gratuity Act, the exemption is the minimum of actual gratuity received, ₹20 lakh, or the amount calculated as per the formula.

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