Gratuity at a glance.
Official 15/26 formula under the Payment of Gratuity Act. Tax-free up to ₹20 lakh. Eligibility, rounding rules and monthly equivalent included.
How gratuity is calculated in India
Under the Payment of Gratuity Act 1972, gratuity = (Basic + DA) × 15 × years of service ÷ 26 for employees of covered establishments. Non-covered employers use a 30-day month divisor instead of 26. You become eligible after completing 5 continuous years of service (the 4 years 240 days rule applies in special cases — use the “months in last year” field to handle rounding).
The first ₹20,00,000 of gratuity is fully tax-exempt under Section 10(10). Any amount above is taxable at your slab rate.
Frequently asked questions
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