Calculate gratuity for Central Government and private sector employees with tax implications
Different rules apply based on category
Basic pay at the time of retirement/exit
DA portion (60% of basic = ₹48,000 if basic is ₹80,000)
Total completed years of service
Service beyond completed years (6+ months counts as 1 year for govt)
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Gratuity is a lump-sum benefit paid by employer as a token of appreciation for long service. It is governed by the Payment of Gratuity Act, 1972 for private sector and CCS (Pension) Rules for Central Government employees.
₹25 lakh
(revised in 2024 after DA hit 50%)
₹20 lakh
(revised 2018)
₹20 lakh tax-exempt cap
Government Employees:
Private (Act-covered):
Private (Not covered under Act):
As per OM dated June 2024, when DA reached 50%, the gratuity ceiling for Central Government employees was automatically increased from ₹20 lakh to ₹25 lakh. This is a 25% jump and benefits all retirees from January 1, 2024 onwards.
Generally no, except in case of death or disability where the 5-year rule is waived. However, in the Madras HC ruling (Mettur Beardsell Ltd. case), employees who completed 4 years 240 days are deemed to have completed 5 years.
No. Gratuity received by Central/State Government employees and Defence personnel is fully exempt from tax under Section 10(10)(i), with no upper limit.
You can file complaint with the Controlling Authority appointed under the Gratuity Act (usually the labour commissioner). Employer is liable to pay simple interest from due date if delayed beyond 30 days from exit.
For Act-covered employees, only Basic + DA. HRA, conveyance, bonus etc. are NOT included. For non-Act employees, commission (as % of turnover) is included in salary.
Yes, if the contract is for employment (not service contract) and the employee completes 5 years. Recent Supreme Court rulings have strengthened gratuity rights for fixed-term and contract employees.
Example: Basic ₹80,000 + DA ₹48,000 = ₹1,28,000 last drawn. Gratuity = 1,28,000 × 15/26 × 30 = ₹22.15 lakh. Capped at ₹25 lakh maximum, so receive ₹22.15 lakh fully tax-free.
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