Gratuity Calculator
Vijay R Singh & Co · Chartered Accountants
Gratuity Calculator — Payment of Gratuity Act Formula and Section 19(1) Table Exemption
15 days' wages per completed year on last-drawn basic + DA — with the ₹20 lakh ceiling and the income-tax exemption under Section 19(1) Table.
Gratuity exemption under the new Act
| Income-tax Act, 1961 | Income-tax Act, 2025 | Provision |
|---|---|---|
| Section 10(10) | Section 19(1) Table | Gratuity exemption now sits in the salary-deductions table |
Verified against the Income-tax Act, 2025 (as amended by the Finance Act, 2026). The 2025 Act applies from tax year 2026-27; the 1961 Act governs returns up to FY 2025-26.
Gratuity Computation
Last Drawn Salary × 15 × Years ÷ 26
ℹ️Eligible after 5 years continuous service. Tax-free up to Rs. 25,00,000. For employees NOT covered: divisor is 30 instead of 26.
Basic salary + dearness allowance
₹
6 months+ rounds to next year
Yrs
📊 Computation
ℹ️ Key Rules
•Min 5 years continuous service (4yr 240 days for seasonal)
•Max gratuity: Rs. 25,00,000 (w.e.f. 29.03.2018)
•Tax exempt u/s 19(1) Table: Least of actual, Rs.25L, or formula
•Death/disablement: fully exempt, no 5-year condition
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How is gratuity calculated?
For establishments under the Payment of Gratuity Act: last drawn basic plus DA x 15/26 x completed years of service. A service period beyond 6 months in the final year rounds up to a full year.
Who is eligible for gratuity?
An employee who has completed five years of continuous service with the employer - the five-year condition is waived on death or disablement.
Is gratuity taxable?
For employees covered by the Act, gratuity is exempt under Section 19(1) Table up to Rs 20 lakh (lifetime aggregate); any excess is taxed as salary.