Gratuity Table India - Amount by Salary & Years of Service

Gratuity Calculation Formula in India

Under the Payment of Gratuity Act, 1972, gratuity is calculated using the formula: (Last Drawn Salary × 15 × Years of Service) ÷ 26. Here, "Last Drawn Salary" means the Basic Salary plus Dearness Allowance (DA) at the time of leaving the organization. The number 15 represents 15 days' wages per completed year of service, and 26 is the number of working days in a month.

For employees not covered under the Gratuity Act (establishments with fewer than 10 employees), the divisor changes to 30 (calendar days instead of working days), resulting in a lower gratuity amount. Use the toggle above the table to compare both scenarios instantly.

How Much Gratuity on Rs 50K, 1L, 1.5L Salary?

These are the most common gratuity questions. Here are quick answers using the standard formula (divisor 26, covered under Act):

• •Gratuity on Rs 50,000 salary, 5 years: Rs 1,44,231 (well within the Rs 20L tax-free limit).
• •Gratuity on Rs 50,000 salary, 10 years: Rs 2,88,462.
• •Gratuity on Rs 50,000 salary, 20 years: Rs 5,76,923.
• •Gratuity on Rs 1,00,000 salary, 10 years: Rs 5,76,923.
• •Gratuity on Rs 1,00,000 salary, 20 years: Rs 11,53,846.
• •Gratuity on Rs 1,50,000 salary, 20 years: Rs 17,30,769 (still within Rs 20L tax-free limit).
• •Gratuity on Rs 2,00,000 salary, 20 years: Rs 23,07,692 (exceeds Rs 20L limit — Rs 3,07,692 is taxable).

For exact figures at every salary and tenure combination, refer to the table above.

Gratuity Eligibility: 5-Year Rule & Exceptions

Under the Payment of Gratuity Act, an employee must complete a minimum of 5 years of continuous service to be eligible for gratuity. If the employee has served 4 years and 6 months or more, it is rounded up to 5 years — making the employee eligible.

Exceptions to the 5-year rule: In cases of death or disability, gratuity is payable regardless of tenure. The Supreme Court of India has also ruled that employees who are retrenched or whose services are terminated (not due to misconduct) are entitled to gratuity even with less than 5 years of service.

Is Gratuity Taxable? Rs 20 Lakh Tax-Free Limit

For employees covered under the Payment of Gratuity Act, gratuity up to Rs 20,00,000 (twenty lakh rupees) is completely tax-free under Section 10(10) of the Income Tax Act. This limit was raised from Rs 10 lakh to Rs 20 lakh effective March 29, 2018.

For government employees, the entire gratuity amount is tax-free with no upper limit. For private sector employees not covered under the Act, the tax exemption is the least of: actual gratuity received, Rs 20 lakh, or half month's salary for each year of completed service (salary × years ÷ 2). Any gratuity amount exceeding the exemption limit is added to your taxable income for that financial year.

Covered vs Not Covered Under Gratuity Act

The Payment of Gratuity Act applies to every factory, mine, oilfield, plantation, port, and railway company, as well as any establishment with 10 or more employees on any day in the preceding 12 months. Once the Act applies, it continues to apply even if the employee count drops below 10.

The key difference in calculation is the divisor: 26 working days for covered employees (resulting in higher gratuity) vs 30 calendar days for non-covered employees. For example, on a Rs 1L salary with 15 years of service, the gratuity is Rs 8,65,385 (divisor 26) vs Rs 7,50,000 (divisor 30) — a difference of over Rs 1.15 lakh.