Gratuity amount, formula and tax treatment.
With a last drawn basic salary + DA of ₹15,000 a month and 15 years of service, your gratuity is ₹1,29,808 under the Payment of Gratuity Act.
Per year of service
₹8,654
If employer not covered by the Act
₹1,12,500
₹15,000 × 15 × 15 ÷ 26 = ₹1,29,808
Same salary, different years of service
Is this gratuity taxable?
For private-sector employees, gratuity up to ₹20 lakh over a career is tax-free under section 10(10), so ₹1,29,808 would be fully exempt (if you haven't received gratuity tax-free before). For government employees, gratuity is fully tax-free.
Remember
- Gratuity is usually payable after 5 years of continuous service with the same employer.
- More than 6 months in your final year counts as a full year under the Act.
- Only basic salary and dearness allowance count — not HRA, bonus or other allowances.
Other salaries, 15 years of service
Frequently asked questions
How much gratuity for ₹15,000 basic salary and 15 years?
Using the formula basic × 15 × years ÷ 26, gratuity is ₹1,29,808. If your employer isn't covered by the Gratuity Act, it is ₹1,12,500 (divisor 30).
Is gratuity calculated on gross salary?
No. Gratuity is calculated on your last drawn basic salary plus dearness allowance only.