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Gratuity Calculator

Calculate your statutory gratuity payout under the Payment of Gratuity Act, 1972 - instantly. Enter your last drawn salary and years of service to see exactly what you're owed.

✓ Payment of Gratuity Act, 1972 ✓ 6-Month Rounding Rule ✓ ₹20L Statutory Cap Applied ✓ 5-Year Eligibility Check
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Gratuity Calculator
Calculate your statutory gratuity payout under the Payment of Gratuity Act, 1972.
₹
yrs
Enter years as decimals (e.g., 5.5 for 5 years 6 months). Minimum 5 years required. Fractions of 6 months or more are rounded up.

— How It Works —

Calculate Gratuity in 3 Steps

Enter your last drawn Basic+DA salary and total years of service - the calculator applies the 6-month rounding rule and ₹20L cap automatically.

1
Enter Basic + DA
Type your last drawn monthly Basic Salary + Dearness Allowance. Not gross salary - only Basic+DA is used in the gratuity formula.
2
Enter Years of Service
Enter total years as a decimal (e.g., 10.5 for 10 years 6 months). Minimum 5 years required. 6-month rounding is applied automatically.
3
Get Gratuity Amount
See your effective tenure after rounding, the formula applied, and the final gratuity - capped at ₹20,00,000 per the Act.

How Is Gratuity Calculated in India?

Gratuity is calculated under the Payment of Gratuity Act, 1972 using a precise formula based on your last drawn Basic+DA salary and effective years of service:

Gratuity = (Last Drawn Salary × 15 × Effective Years) ÷ 26
Where: Last Drawn Salary = Basic + DA (not gross) · 15 = days wages per year of service · 26 = working days per month

The figure 26 represents the standard working days in a month (excluding 4 Sundays). The 15 represents half a month's salary for each completed year of service. Together, this gives approximately half a month's pay per year worked.

For example: Last Drawn Salary ₹50,000, 10 years of service → Gratuity = (₹50,000 × 15 × 10) ÷ 26 = ₹2,88,462.

The 6-Month Rounding Rule Explained

The Act specifies that fractions of a year are treated using the 6-month rule - a critical detail that can add or remove a full year from your gratuity calculation:

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≥ 6 Months → Round Up
If fractional months are 6 or more, the year is counted as a complete year. Example: 10 years 7 months → calculated as 11 years.
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< 6 Months → Round Down
If fractional months are less than 6, that partial year is dropped. Example: 10 years 4 months → calculated as 10 years only.

This rounding can make a significant difference. At ₹50,000 salary, one extra year of effective tenure adds approximately ₹28,846 to your gratuity. The calculator applies this rule automatically based on your decimal input.

Gratuity Reference Table

Sample gratuity amounts at common salary and tenure combinations (6-month rounding applied, ₹20L cap not triggered):

Basic + DA Years of Service Effective Years Gratuity Payable
₹25,000 5 years 5 years ₹72,115
₹40,000 7.5 years 8 years ₹1,84,615
₹50,000 10 years 10 years ₹2,88,462
₹75,000 15 years 15 years ₹6,49,038
₹1,00,000 20 years 20 years ₹11,53,846
₹1,50,000 26+ years 26 years ₹20,00,000 (capped)

Gratuity is capped at ₹20,00,000 under the Payment of Gratuity Act, 1972 (as amended in 2018). Amounts above this are not legally required - though employers may voluntarily pay more.

Eligibility, Tax Treatment & When Gratuity Is Paid

Gratuity is payable to an employee upon retirement, resignation, death, disablement, or retrenchment - provided they have completed a minimum of 5 years of continuous service with the same employer. The 5-year rule is waived in case of death or disablement.

Tax exemption: For employees covered under the Act, gratuity is tax-exempt up to ₹20,00,000 under Section 10(10) of the Income Tax Act. Government employees receive full tax exemption on gratuity without any upper limit.

Gratuity must be paid within 30 days of it becoming payable. If delayed, the employer is liable to pay simple interest on the amount. The employer is also required to obtain gratuity insurance coverage under the Act.

— Explore More —

Related Tools & Gratuity Insights

🔗 Related Salary Tools
💰 In-Hand Salary CalculatorTake-home after PF, PT, and income tax → 🏦 Provident Fund (PF) CalculatorEPF + EPS breakdown with annual corpus → 💼 CTC to In-Hand CalculatorSee how gratuity provisioning fits in your CTC → 📊 Salary Breakup CalculatorFull component breakdown - Basic, HRA, PF, Gratuity → 📋 Income Tax CalculatorGratuity is tax-free up to ₹20L - check your liability → 💰 View All Salary Calculators20+ salary, tax, and retirement tools →
💡 Quick Gratuity Facts
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Minimum 5 Years - No Exceptions (Except Death)
Gratuity requires minimum 5 continuous years of service. The 5-year rule is waived only in case of the employee's death or permanent disablement.
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Statutory Cap: ₹20,00,000 (Revised 2018)
The maximum tax-exempt gratuity was raised from ₹10L to ₹20L in March 2018. Employers may voluntarily pay more, but only ₹20L is legally mandated and tax-free.
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Formula Uses Basic+DA - Not Gross Salary
Like PF, gratuity is calculated on Basic + DA only. HRA, conveyance, and special allowances are excluded. A lower Basic in your CTC directly reduces your gratuity.
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Tax-Free Up to ₹20L for Private Employees
Gratuity received under the Act is exempt from income tax up to ₹20,00,000 under Section 10(10). Government employees get unlimited tax exemption.
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Must Be Paid Within 30 Days
Employers must pay gratuity within 30 days of the due date. Delays attract simple interest. Failure to pay is a criminal offence under the Act.
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Gratuity Is Part of Your CTC
Most employers include a gratuity provision of 4.81% of Basic+DA in the CTC structure. This is an accrual - it's only paid out when you leave after 5+ years.
FAQ

Frequently Asked Questions

The statutory formula is: Gratuity = (Last Drawn Salary × 15 × Effective Years of Service) ÷ 26. "Last Drawn Salary" means Basic + Dearness Allowance only - not gross salary. The 15 represents 15 days' wages per year of service, and 26 is the standard number of working days in a month. For example: ₹50,000 salary × 10 years → (₹50,000 × 15 × 10) ÷ 26 = ₹2,88,462.
A minimum of 5 continuous years of service with the same employer is required for gratuity eligibility under the Payment of Gratuity Act, 1972. This 5-year requirement applies to resignation and retirement. However, it is waived in cases of death or permanent disablement - in these situations, gratuity is payable regardless of how many years were completed.
If your total service includes a fractional year of 6 months or more, it is rounded up to the next full year. If the fraction is less than 6 months, it is ignored. Example 1: 10 years 7 months → effective tenure = 11 years. Example 2: 10 years 4 months → effective tenure = 10 years. This rule is part of the Act's interpretation and is applied in this calculator automatically using the decimal input (e.g., 10.5 = 10 years 6 months = rounds up to 11).
The statutory cap under the Payment of Gratuity Act (as amended in March 2018) is ₹20,00,000 (₹20 lakhs). If the calculated amount exceeds this, the payable amount is limited to ₹20L. Employers may voluntarily pay higher amounts, but only ₹20L is legally mandated and tax-exempt. The cap was previously ₹10L before the 2018 amendment.
Gratuity received by employees covered under the Payment of Gratuity Act is tax-exempt up to ₹20,00,000 under Section 10(10) of the Income Tax Act, 1961. Any amount received beyond ₹20L is taxable as income in the year of receipt. Government employees (central, state, local authority) get complete tax exemption on gratuity with no upper limit. For employees not covered by the Act (e.g., those with less than 10 employees), a different exemption formula applies.
Gratuity is calculated on Basic Salary + Dearness Allowance (DA) only - not on gross salary. Components like HRA, conveyance allowance, special allowances, and other benefits are excluded. This is the same base used for PF calculations. Most offer letters and CTC structures show Basic and DA separately - use only those two figures for gratuity calculation.
Gratuity must be paid within 30 days of it becoming payable (i.e., from the date of resignation, retirement, death, or disablement). If payment is delayed beyond 30 days, the employer is required to pay simple interest on the gratuity amount. Deliberately withholding gratuity is a punishable offence under the Act, with penalties including imprisonment of up to 2 years or a fine of up to ₹20,000.
No. All calculations happen entirely in your browser using JavaScript. No data is sent to any server, stored in any database, or shared with any third party. Your salary and service figures exist only in your browser tab and are cleared when you navigate away.

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