Skip to main content
CTCPlanner

Gratuity calculator

That 4.81% line in your CTC is gratuity accrual — money your employer sets aside for a payout you receive after five years of continuous service. Here is where the number comes from and how the payout is computed.

See gratuity in my CTC

What it means

Under the Payment of Gratuity Act, 1972, gratuity payable is 15 days of last-drawn basic (plus DA) for every completed year of service, using a 26-working-day month. 15 ÷ 26 ÷ 12 ≈ 4.81% — the annual accrual rate employers cost into CTC.

The formula

Gratuity = (15 ÷ 26) × last-drawn monthly Basic × years of service

Service beyond six months in the final year rounds up to a full year. The statutory payout is tax-exempt up to ₹20,00,000 for covered employees.

Worked example

  • Last-drawn basic ₹1,00,000/month, 10 years of service.
  • Gratuity = 15/26 × 1,00,000 × 10 ≈ ₹5,76,923.
  • Within the ₹20L exemption, so fully tax-free.

How to use it

  1. 1Locate the accrual. The breakdown page shows gratuity as 4.81% of basic inside your CTC.
  2. 2Estimate the payout. Apply 15/26 × monthly basic × completed years.
  3. 3Plan around five years. Leaving before five years generally forfeits the payout (with narrow exceptions).

Frequently asked questions

Is gratuity part of my in-hand salary?

No. It sits inside CTC as an accrual and is paid only on exit after qualifying service — one reason in-hand is lower than CTC ÷ 12.

When do I qualify for gratuity?

After five years of continuous service with the employer (death/disability excepted).

Is gratuity taxable?

For employees covered by the Act, gratuity is exempt up to ₹20,00,000 across a lifetime; amounts beyond that are taxable as salary.

Related tools & guides

Calculations on this site are based on official government provisions and should be verified against the latest government publications (incometax.gov.in).