All you need to know about Quicko Gratuity Calculator

Planning retirement or leaving your job and unsure how much gratuity you are entitled to? Quicko’s Gratuity Calculator helps you estimate the gratuity amount you may receive, along with the exempt and taxable portion, based on your salary and years of service.

Gratuity is a statutory benefit governed by the Payment of Gratuity Act, 1972 and its tax treatment is defined under the Income-tax Act, 2025. Knowing how it is calculated helps you avoid surprises while filing your return.

What is Gratuity?

Gratuity is a lump-sum amount paid by an employer to an employee in recognition of long and continuous service. It is generally payable on retirement, resignation, termination, death or disability, subject to eligibility conditions.

Under the Payment of Gratuity Act, 1972, employees who complete at least 5 years of continuous service are typically eligible for gratuity (except in case of death or disability, where the 5-year condition does not apply).

For income-tax purposes, gratuity received may be fully exempt, partially exempt or taxable depending on your employer type and the amount received.

What is the Quicko Gratuity Calculator?

The Quicko Gratuity Calculator is an online tool that helps you compute:

• Gratuity as per the statutory formula

• Exempt gratuity under the Income-tax Act, 2025

• Taxable portion to be reported under “Income from Salary”

Instead of manually applying formulas and exemption limits, you simply enter your:

• Employer type (Government / Non-Government)

• Whether covered under the Payment of Gratuity Act

• Last drawn Basic Salary + DA

• Total years of service

• Actual gratuity received

The tool instantly shows a clear breakup of calculated gratuity, exempt amount and taxable amount.

How gratuity is calculated

1. If covered under the Payment of Gratuity Act, 1972

Gratuity = (Last Drawn Basic + DA) × Completed Years of Service × (15 / 26)

For this purpose:

• If service exceeds 6 months in the final year, it should be rounded up to the next full year.

2. If not covered under the Act

In cases where the Act does not apply, gratuity is commonly calculated as:

Gratuity = (Last Drawn Basic + DA) × Completed Years of Service × (15 / 30)

How gratuity exemption is calculated (Income-tax Act, 2025)

The tax treatment depends on employer type.

For Government employees

Gratuity received is fully exempt from tax.

For Non-Government employees

Exempt gratuity is the least of:

• Actual gratuity received

• Gratuity calculated as per the Act formula

• ₹20,00,000 (maximum exemption limit)

Any amount above this exempt portion is taxable and must be reported as part of “Income from Salary” in your ITR.

When is gratuity taxable?

Gratuity may become taxable in situations such as:

• Amount received exceeds statutory calculation

• Amount exceeds ₹20,00,000 exemption limit (for non-government employees)

• Gratuity received during employment (not on retirement / cessation)

The calculator shows the exact taxable portion so you can correctly report it while filing your return.

How to use the Quicko Gratuity Calculator

• Choose employer type (Government / Non-Government).

• Select whether your employer is covered under the Payment of Gratuity Act.

• Enter your salary details – Last drawn Basic Salary + DA.

• Enter total years of service (rounded as per rule).

• Enter the actual gratuity amount received.

The tool automatically applies the correct formula and shows:

• Calculated gratuity

• Exempt gratuity

• Taxable gratuity

Example:

Inputs:

• Employer type: Non-Government

• Covered under Act: Yes

• Basic + DA: ₹50,000 per month

• Years of service: 8 years

• Gratuity received: ₹2,50,000

Outputs:

• Calculated gratuity: ₹2,30,769

• Exempt gratuity: ₹2,30,769

• Taxable gratuity: ₹19,231

Benefits of using the Quicko Gratuity Calculator

Using a dedicated gratuity calculator on Quicko helps you:

• Accurately estimate gratuity: Apply the statutory formula without manual errors.

• Understand tax impact: Clearly see exempt vs taxable gratuity before filing ITR.

• Plan retirement better: Estimate expected payout based on salary and tenure.

• Report correctly in ITR: Avoid mismatches between employer payout and tax reporting.

Use the Quicko Gratuity Calculator above to estimate your gratuity and understand its tax treatment before filing your return.