Gratuity Calculator
Estimate your gratuity in India using the Payment of Gratuity Act formula, with service rounding, eligibility check, the ₹20 lakh statutory cap, and Section 10(10) tax exemption.
Gratuity inputs
Last drawn monthly Basic + Dearness Allowance and total years and months of continuous service. Defaults follow the Payment of Gratuity Act, 1972.
Last drawn Basic per month.
Set to 0 if your CTC does not include a separate DA.
Total whole years of continuous service.
6 months or more rounds up to the next full year (Sec. 4(2)).
Estimated gratuity
₹2,88,461.54
Computed as ₹50,000.00 × 15 × 10 ÷ 26.
Eligibility status
Eligible under standard 5-year rule
Service of 10 year(s) 0 month(s) meets the Section 4(1) threshold.
Last drawn salary used
₹50,000.00
Monthly Basic + Dearness Allowance.
Rounded years of service
10 years
You entered 10 year(s) 0 month(s).
Formula breakdown
₹50,000.00 × 15 × 10 ÷ 26
Equals ₹2,88,461.54 before any statutory cap.
Tax-exempt portion (Sec. 10(10))
₹2,88,461.54
Exempt up to ₹20,00,000.00 for employees covered by the Act.
Taxable portion
₹0.00
Any amount above the Section 10(10) cap is added to taxable salary.
Statutory ceiling
₹20,00,000.00
Notification S.O. 1420(E), Ministry of Labour & Employment, 29 March 2018.
Estimate only. Not legal or tax advice. This calculator provides a gratuity estimate for educational purposes only. Actual entitlement can vary based on your employment contract, employer-specific policies that exceed the statutory minimum, mode of cessation of service, and individual tax circumstances. Always verify with your HR department, a qualified tax professional, or the Ministry of Labour & Employment / Income Tax Department.
Official sources
The formula, service-rounding rule, statutory ceiling, and income-tax exemption used by this calculator were verified against the following government publications:
- Payment of Gratuity Act, 1972: Chief Labour Commissioner (Ministry of Labour & Employment)
- Press Information Bureau: Payment of Gratuity (Amendment) Act, 2018 brought in force on 29-Mar-2018
- Payment of Gratuity Act, 1972: Government of NCT of Delhi (Labour Department)
- Income Tax India: Salary Income FAQs (Section 10(10) gratuity exemption)
How it works
How gratuity is calculated
Last drawn salary
"Salary" under the Act means Basic + Dearness Allowance. HRA, conveyance, and other allowances do not enter the gratuity formula.
Years of service
Continuous service determines the multiplier. A part year of 6 months or more rounds up to the next full year; less than 6 months is dropped (Sec. 4(2)).
Statutory ceiling
The maximum gratuity payable under the Act is ₹20,00,000 (Sec. 4(3), Notification S.O. 1420(E), 29-Mar-2018).
Formula
The gratuity formula
Standard formula
Gratuity = Last Drawn Salary × 15 × Years of Service ÷ 26. The "15" is 15 days of salary credited per completed year; the "26" is the standard working days per month under the Act.
Service rounding
Apply Section 4(2): a part year of 6 months or more rounds up to the next full year. 10 years 7 months counts as 11 years; 10 years 5 months counts as 10 years.
Tax treatment
Exempt under Section 10(10) up to the ₹20 lakh cap for employees covered by the Act (CBDT clarifications align this with the labour-law ceiling). Anything above the cap is added to taxable salary.
Assumptions
What this calculator does and doesn't model
What we model
The standard Payment of Gratuity Act formula, the 6-month service-rounding rule, the ₹20 lakh statutory ceiling, and the ₹20 lakh Section 10(10) tax exemption.
Simplifications
We treat the employee as covered by the Act and use Basic + DA as the salary. Death/disability exception to the 5-year rule is described in text but not automatically applied.
Out of scope
Employer-specific gratuity policies that pay more than the statutory minimum, gratuity trust fund taxability for the employer, surcharge, and the alternate calculation for employees not covered by the Act (last-10-month average salary basis).
FAQ
Gratuity calculator questions
Gratuity is a lump-sum benefit paid by an employer to an employee for long, continuous service. It is governed by the Payment of Gratuity Act, 1972 (administered by the Ministry of Labour & Employment) and is typically paid on superannuation, retirement, resignation, or on death/disablement.
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