How is the 5-year service rule applied?

Continuous service of 4 years 240 days is treated as 5 years by most courts. Maternity leave, paid leave and authorised breaks count toward the service period.

Gratuity Calculator

Gratuity = Last drawn salary × 15/26 × years of service (subject to ₹20 lakh statutory cap for tax-free treatment).

Last drawn basic + DA(₹/month)80,000

Years of completed service(years)12

Computed gratuity

₹5,53,846

Tax-free portion (capped ₹20L)

₹5,53,846

Taxable portion

₹0

Requires minimum 5 years of continuous service to be eligible.

// about this calculator

Gratuity is a statutory retirement benefit payable on resignation, retirement or death — provided the employee has completed 5 years of continuous service. Under the Payment of Gratuity Act, 1972, the formula is salary × 15/26 × years of service. The first ₹20 lakh is fully tax-free; anything above is taxable as 'income from salary'.

// frequently asked questions

Yes if you've completed 5 years of continuous service with the same employer. Death or disability waives the 5-year condition. Government employees follow the CCS (Pension) Rules instead.