Investing
Gratuity Calculator
Gratuity payable under the 15/26 formula, and how much of it is exempt under the lifetime ₹20 lakh cap.
Last updated 21 August 2026 · Free · No sign-up · Nothing you type leaves your browser
Your employment
A remainder past 6 months rounds up to a full year.
The ₹20 lakh exemption is a lifetime cap across every employer, not a per-job allowance.
Gratuity payable
₹5.54 L
(Basic + DA) × 15/26 × completed years of service, over 12 years of service.
Exempt from tax
₹5.54 L
Taxable at your slab
₹0
Lifetime cap remaining
₹14.5 L
After this payout
The ₹20 lakh exemption under Sec 10(10)(iii) is a lifetime figure across every employer you have worked for, not a fresh allowance each time you change jobs. If you have already used part of it, only the remainder is available now — enter what you have already claimed to see the effect.
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A formula that looks simple and is not, quite
The 15/26 formula gets quoted everywhere, but two details change the answer more than people expect: whether your employer is covered under the Payment of Gratuity Act at all, and whether the ₹20 lakh exemption has already been partly used against an earlier employer. Both are handled directly in this calculator rather than assumed away.
The lifetime cap catches people mid-career
Sec 10(10)(iii) caps the tax-free portion at ₹20 lakh across your entire working life, not per job. Two or three job changes with meaningful gratuity payouts along the way can use up that headroom well before a final retirement payout, at which point the remainder is taxed at your slab rate like ordinary income. This has not been revised since March 2018, so treat the figure as a snapshot rather than a permanent fact — confirm the current cap before relying on it for a near-term decision.
A gratuity payout is a lump sum, not an income stream — once received, how you deploy it interacts with the rest of your plan. See our retirement corpus calculator for how a one-time addition like this moves your overall target.
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Frequently asked questions
What is the gratuity formula?
For employees covered under the Payment of Gratuity Act, 1972 — most private and PSU employers with 10 or more staff — the formula is (last drawn Basic + DA) × 15/26 × completed years of service, where a remainder past 6 months rounds up to a full year. Employees at smaller, uncovered establishments use a different formula based on average salary over the last 10 months, with no rounding up of the final year.
Is gratuity always tax-free up to ₹20 lakh?
The ₹20 lakh exemption under Sec 10(10)(iii) is a lifetime figure across every employer you have ever worked for, not a fresh allowance each time you change jobs. If you claimed exemption on gratuity from an earlier employer, only the remaining headroom is available now — this calculator lets you enter what has already been used.
Do government employees pay tax on gratuity?
No. Central and state government employees, and employees of local authorities, are fully exempt from tax on gratuity under Sec 10(10)(i), with no rupee cap. Their gratuity amount itself is computed under separate pension rules rather than the Payment of Gratuity Act, which is why this calculator does not estimate a figure for that case.
Does gratuity depend on why I left the job?
Eligibility generally requires at least 5 years of continuous service, with exceptions for death or disability. The calculation itself does not otherwise depend on whether you resigned, retired, or were let go — but confirm your specific eligibility with your employer's HR policy, since company rules occasionally add conditions beyond the statutory minimum.