Gratuity is a statutory benefit paid by employers to eligible employees under the Payment of Gratuity Act 1972. These scenarios show exact gratuity amounts for common salary and service year combinations, with eligibility status and tax treatment.
The standard formula is Gratuity = (last drawn basic + DA) × 15/26 × completed years of service. The 15/26 ratio represents 15 days of pay for every year served, calculated on a 26-day working month. Completed service of 6 months or more in the final year rounds up to a full year. Each scenario assumes "salary" represents the basic + DA component used in the formula - your gross monthly salary may differ.
How to use these scenarios: match your last-drawn basic + DA to the closest figure, then read the gratuity amount for your service tenure. Note that gratuity is payable only after completing 5 continuous years of service (waived in case of death or disability) - see the FAQ below for eligibility rules and the ₹20 lakh lifetime tax-free cap that applies to private-sector employees.
Browse All Scenarios
- Gratuity — ₹30,000/month after 5 years — Amount: ₹86,538
- Gratuity — ₹30,000/month after 10 years — Amount: ₹1,73,077
- Gratuity — ₹50,000/month after 5 years — Amount: ₹1,44,231
- Gratuity — ₹50,000/month after 10 years — Amount: ₹2,88,462
- Gratuity — ₹50,000/month after 20 years — Amount: ₹5,76,923
- Gratuity — ₹75,000/month after 10 years — Amount: ₹4,32,692
- Gratuity — ₹1 Lakh/month after 5 years — Amount: ₹2,88,462
- Gratuity — ₹1 Lakh/month after 15 years — Amount: ₹8,65,385
Frequently Asked Questions
How is gratuity calculated under the Payment of Gratuity Act?
Gratuity = (last drawn basic + DA) × 15/26 × completed years of service. The 15/26 ratio represents 15 days' wages for every year served, calculated on a 26-day month. Service of 6 months or more in the final year rounds up to a full year. These scenarios use the formula assuming basic + DA equals the salary figure shown.
Who is eligible for gratuity?
Gratuity is paid by employers covered under the Payment of Gratuity Act (typically organisations with 10+ employees), to employees who have completed at least 5 continuous years of service. Eligibility is triggered by resignation, retirement, termination (other than for misconduct), or in the case of the employee's death or disability - where the 5-year minimum is waived.
Is gratuity taxable?
Government employees: fully tax-exempt. Private-sector employees: tax-free up to the lower of (a) ₹20 lakh lifetime limit, (b) the actual gratuity received, or (c) the formula amount. Anything above this is added to your salary income and taxed at slab rate. The ₹20 lakh limit was raised from ₹10 lakh in 2019 and applies cumulatively across all employers.
Is gratuity part of my CTC?
Yes - most companies show gratuity as 4.81% of basic salary in the CTC breakup, representing the employer's annual provision. However, you only receive it on exit and only if you cross the 5-year service threshold. Treating gratuity as guaranteed annual income is misleading; treat it as a deferred lump sum that materialises only on a long enough tenure.
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