Gratuity Calculator

Any employee who has completed 5 years of continuous service with the same employer, on resignation, retirement, death, or disablement. The 5-year rule is waived in case of death or permanent disablement. The Payment of Gratuity Act, 1972 covers employers with 10 or more employees in factories, mines, oilfields, plantations, ports, railways, shops, and establishments.

Gratuity = (Last drawn basic + DA) × 15/26 × Years of completed service. The 15/26 factor represents 15 days' pay per year of service, with 26 working days assumed per month. Service over 6 months in a year is rounded up to a full year (e.g. 7 years 7 months counts as 8 years; 7 years 5 months counts as 7).

For employees of organisations NOT covered under the Gratuity Act (typically <10 employees), the formula is: (Basic + DA) × 15/30 × Years of service. The 30 represents calendar days. Rounding rules differ — only fully completed years count, no rounding up.

Capped at ₹20 lakh as per Section 4(3) of the Payment of Gratuity Act (revised in 2018). Anything beyond ₹20 lakh that the employer pays is taxable as salary. The cap applies to the lifetime — across all jobs combined for tax exemption purposes.

For government employees: fully exempt. For Gratuity-Act-covered private employees: lower of (a) ₹20 lakh, (b) actual gratuity received, or (c) 15 days × last salary × years (per the formula above) is exempt; the rest is taxable. For non-covered employees: similar lower-of rule but the formula uses 15/30 instead of 15/26 and tenure counts only completed years.