Gratuity Calculator India

Gratuity = (Last drawn salary × 15 × completed years of service) ÷ 26. Salary means monthly Basic pay plus Dearness Allowance (DA). The 15 stands for fifteen days’ wages for each completed year of service, and 26 is the number of working days in a month assumed by the Payment of Gratuity Act, 1972. For example, with a last drawn Basic + DA of ₹50,000 and 10 years of service, gratuity = (50,000 × 15 × 10) ÷ 26 = ₹2,88,461.54.

Only Basic pay plus Dearness Allowance (DA) count. Allowances such as HRA, conveyance, special allowance, and bonuses are excluded, and CTC or gross salary must not be used. If your salary has no DA component — common in the private sector — use your Basic pay alone.

The Act counts ‘every completed year of service or part thereof in excess of six months’. In practice, if the final year has more than 6 months of service, it counts as a full year: 7 years 8 months becomes 8 years, while 7 years 4 months stays 7 years. Exactly 6 months does not round up under a strict reading of the law, though some employers round it up — this calculator follows the statutory text.

Employees of establishments with 10 or more workers (factories, mines, shops, companies, educational institutions and others) who complete at least 5 years of continuous service. Gratuity becomes payable on resignation, retirement, superannuation, or termination, and is paid to the employee or their nominee.

Generally no — 5 years of continuous service is the minimum. The exception is death or disablement due to accident or disease: gratuity is then payable for the actual service completed, even before 5 years. Note also that under the Act’s definition of continuous service, an employee who worked at least 240 days in the fifth year (190 days for a five-day week) is treated as completing five years, so some employers pay after about 4 years and 8 months. This calculator applies the strict five-year rule — confirm your employer’s convention with HR.

For Central and State government employees, defence personnel, and local-authority employees, gratuity is fully exempt from income tax. For other employees covered by the Payment of Gratuity Act, the least of these three is exempt: ₹20,00,000, the gratuity actually received, and the statutory entitlement (last drawn salary × 15 × years ÷ 26). Any amount above the exempt portion is taxable as salary income.

₹20 lakh (₹20,00,000). The limit was raised from ₹10 lakh by the Payment of Gratuity (Amendment) Act, 2018. It applies as a lifetime ceiling across all employers — gratuity received from earlier employers counts toward the same limit.

Yes. The Act caps statutory gratuity at ₹20,00,000. An employer may voluntarily pay more, but the excess is treated as an ex gratia payment and is taxable in the employee’s hands.

For establishments outside the Act (generally fewer than 10 employees), the common convention is (average salary of the last 10 months × 15 × years of service) ÷ 30, using 30 calendar days instead of 26, and part years are not rounded up. The tax exemption is then the least of ₹10,00,000, the gratuity actually received, and the eligible amount.

Then your gratuity salary is simply your Basic pay. DA is a separate component mostly seen in government and PSU pay structures; most private-sector salaries have no DA, and that is perfectly normal for this calculation.

The Payment of Gratuity Act, 1972 has been subsumed under the Code on Social Security, 2020. The gratuity formula, the 15/26 factors, the 5-year eligibility rule, and the rounding rule are unchanged under the Code.

No. It is an educational estimate based on the statutory formula. Actual payouts depend on your employer’s policies, your exact service record, and current tax rules. Confirm the figures with your HR department or a tax professional before making decisions.