What is the Gratuity Calculator?
Gratuity is a lump-sum payment your employer must give you after at least 5 years of continuous service, under the Payment of Gratuity Act, 1972. It's a thank-you for your tenure.
This calculator applies the statutory formula and shows whether you hit the ₹20 lakh tax-exempt ceiling for non-government employees.
Formula
Gratuity = (15 / 26) × Last drawn (basic + DA) × Completed years of service
- 15/26 — 15 days' salary for every completed year, based on a 26-day work month
- Last drawn — Most recent monthly basic + DA
Service over 6 months in the final year is rounded up to a full year.
Step-by-step example
Setup: ₹50,000 last basic+DA, 8 years of service.
- (15/26) × 50,000 × 8 = ₹2,30,769
Answer: Gratuity ≈ ₹2,30,769 · Fully tax-exempt (within ₹20L cap)
Frequently asked questions
What's the maximum tax-exempt gratuity?
₹20 lakh in a lifetime for non-government employees (raised from ₹10L in 2018).
Is 5 years strict?
Yes, unless service ends due to death or disability. Most courts accept 4 years 240 days as eligible.