Gratuity
A lump sum your employer pays when you leave after 5 or more years of service.
Under the Payment of Gratuity Act it's 15 days' wages for each year of service: last basic pay plus DA × 15 ÷ 26 × years. For private-sector employees it's tax-free up to ₹20 lakh.
Service of more than 6 months in the last year counts as a full year.
Example
Last basic + DA of ₹60,000 and 10 years: ₹60,000 × 15 ÷ 26 × 10 = about ₹3.46 lakh.
Gratuity Calculator
Gratuity under the Payment of Gratuity Act from your last salary and years of service.
Related terms
Rules as of tax year 2026-27. Written by the Welthr team; last reviewed on . Not financial advice.