What is the minimum service period to get gratuity?

Under the Payment of Gratuity Act, the minimum qualifying period is 5 continuous years of service with the same employer. However, if an employee dies or becomes disabled, gratuity is paid regardless of years served. A partial year of 6 months or more is rounded up to the next full year. Example: 5 years 7 months = 6 years for gratuity calculation. 5 years 4 months = 5 years.

When must the employer pay gratuity?

The employer must pay gratuity within 30 days of it becoming payable (on retirement, resignation after 5 years, death, or disability). If the employer delays, they must pay simple interest at the rate specified by the government (currently 10% per annum) for the delay period. The employee must apply for gratuity within 30 days of it becoming due using Form I under the Gratuity Rules.

Which companies are covered under the Payment of Gratuity Act?

The Payment of Gratuity Act 1972 covers: factories, mines, oilfields, plantations, ports, railways, shops, and establishments employing 10 or more persons. Once covered, the Act continues to apply even if employee count falls below 10. Employees earning more than ₹10 lakh per year are not covered (as of last amendment). Contract workers, seasonal workers, and piece-rate workers employed for at least one year are also covered.

✅ Free Tool — Payment of Gratuity Act 1972

Gratuity Calculator India 2026 — Act Covered & Non-Covered Employees

Calculate your exact gratuity amount, check eligibility, see tax exemption up to ₹20 lakh, and view year-by-year gratuity milestones.

Gratuity Formula (Act-covered): Gratuity = (Basic + DA) × Years of Service × 15 ÷ 26
Non-covered employees: Gratuity = (Basic + DA) × Years × 15 ÷ 30
Minimum service: 5 continuous years. Tax exempt: Up to ₹20 lakh for private sector. Partial year rule: 6+ months rounds up to next full year.

Gratuity (Act Covered)

Monthly Basic Salary + DA ₹30,000

₹5K₹5 L

Years of Service

010 Years40

Additional Months (6+ months rounds up)

Act-covered formula: (Basic + DA) × Years × 15 ÷ 26
Divisor 26 = working days in a month. 15 = days of salary per year of service.

Gratuity Amount

₹1,73,077

✅ Eligible — 10 years completed

= ₹30,000 × 10 × 15/26

💰 Tax TreatmentSection 10(10) of IT Act

Gratuity Amount₹1,73,077

Tax-Exempt Limit₹20,00,000

Exempt Amount₹1,73,077

Taxable Amount₹0

Tax Status ✅ Fully Exempt

📐 Calculation Breakdown

(₹30,000) × 10 × 15 ÷ 26 = ₹1,73,077

Basic + DA: ₹30,000/month
Effective years: 10 years (no rounding needed)
Divisor: 26 working days (Act-covered)
Days credit: 15 days per year of service

📈 Gratuity Growth Year by Year

📋 Gratuity Milestone Table — At ₹30,000 Basic + DA

Gratuity amount at different service milestones for a ₹30,000/month Basic + DA (Act-covered, divisor 26). Use the calculator above for your exact salary.

Years of Service	Eligibility	Gratuity (Act)	Gratuity (Non-Act)	Tax Status
1–4 years	❌ Not eligible	—	—	—
5 years	✅ Eligible	₹86,538	₹75,000	Fully exempt
10 years	✅ Eligible	₹1,73,077	₹1,50,000	Fully exempt
15 years	✅ Eligible	₹2,59,615	₹2,25,000	Fully exempt
20 years	✅ Eligible	₹3,46,154	₹3,00,000	Fully exempt
25 years	✅ Eligible	₹4,32,692	₹3,75,000	Fully exempt
30 years	✅ Eligible	₹5,19,231	₹4,50,000	Fully exempt

* At ₹30,000 Basic+DA. Act-covered uses 15/26 formula; Non-covered uses 15/30.

📖 How to Use This Gratuity Calculator

Select Employee TypeChoose "Gratuity Act Covered" if your employer has 10+ employees (most companies). Choose "Non-Covered" for smaller establishments that pay gratuity voluntarily.
Enter Basic + DAEnter your last drawn monthly Basic Salary plus Dearness Allowance (DA). Check your salary slip — gratuity is calculated only on Basic + DA, not gross salary or CTC.
Set Years and MonthsEnter your total service years and additional months. The partial year rule: 6 or more additional months counts as a full year. 5 months or less is dropped.
Read ResultsSee gratuity amount, eligibility status, full formula with your numbers, tax exemption status, and year-by-year growth chart.

✅ Why Use This Calculator

⚖️

Both Act Types

Separate calculation for Act-covered (÷26) and non-covered (÷30) employees.

📅

Partial Year Rule

Automatically applies the 6-month rounding rule — shows effective years used.

💸

Tax Exemption

Shows exactly how much is exempt (up to ₹20L) and how much is taxable.

📐

Full Formula

Shows the complete worked formula with your actual numbers — not just a result.

📈

Growth Chart

Year-by-year chart shows how gratuity grows — useful for retirement planning.

🔒

100% Private

No data stored or sent anywhere. Runs in your browser.

❓ Gratuity — Frequently Asked Questions

What is the gratuity formula in India?

For Act-covered employees: Gratuity = (Basic Salary + DA) × Years of Service × 15/26. The 15 represents 15 days of salary per year, and 26 is the number of working days in a month. For non-covered employees: Gratuity = (Basic + DA) × Years × 15/30. Example at ₹40,000 Basic+DA for 10 years (Act-covered): 40,000 × 10 × 15/26 = ₹2,30,769.

What is the minimum service for gratuity?

The minimum qualifying service for gratuity under the Payment of Gratuity Act is 5 continuous years with the same employer. Exception: if an employee dies or becomes permanently disabled, gratuity is payable regardless of years served. The 5-year rule does not apply in cases of death or disability. Partial year rule: 6+ months counts as one full year. So 4 years 7 months = 5 years for calculation purposes.

Is gratuity taxable in India?

Government employees: fully tax-exempt. Private sector (Act-covered): exempt up to ₹20 lakh. Private sector (non-covered): exempt up to the minimum of actual gratuity, ₹20 lakh, or half month's average salary × years of service. The ₹20 lakh limit is a lifetime aggregate across all employers — not per job. Any gratuity above ₹20 lakh total (from all employers combined) is taxable as income.

Can gratuity be forfeited?

Full forfeiture is allowed only for serious misconduct: violence, riotous behaviour, arson, or acts of moral turpitude. Partial forfeiture is allowed for wilful damage or loss caused by negligence. Gratuity CANNOT be forfeited for: resignation, poor performance, normal termination, or redundancy. The Act protects gratuity from being attached by a court order except for recovery of dues to employer.

Can I get gratuity if I resign before 5 years?

No — resigning before completing 5 years means no gratuity under the Payment of Gratuity Act. However: (1) Some employers pay ex-gratia voluntarily for shorter service. (2) If you die or become permanently disabled before 5 years, gratuity is still payable. (3) Some employment contracts offer gratuity for 3+ years of service as a company policy (above the Act minimum). Check your appointment letter.

Within how many days must gratuity be paid?

The employer must pay gratuity within 30 days of it becoming payable. The employee should apply using Form I under the Gratuity Rules. If the employer delays beyond 30 days without reason, they must pay simple interest at 10% per annum on the delayed amount from the due date. The employee can file a complaint with the Controlling Authority (Labour Commissioner) for recovery.

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