🎁 Retirement Benefit

Gratuity Calculator

ग्रेच्युटी कैलकुलेटर

Calculate your gratuity payable under Payment of Gratuity Act, 1972. For private sector, government and PSU employees. Formula: Basic+DA × 15/26 × years.

💼 Service Details

Only basic + dearness allowance, not gross salary. Check your last payslip.
More than 6 months rounds up to an extra year per the Act.
Covered = most private employers with 10+ staff, factories, shops. Uncovered employers can still pay gratuity but use divisor 30 instead of 26.
Gratuity Payable
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tax-free up to ₹20 lakh
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Counted years
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Before ₹20L cap
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Tax-free part
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Taxable part

📐 Formula Breakdown

Gratuity Formula — Exactly How It Works

Under the Payment of Gratuity Act, 1972, for employees covered under the Act:

Gratuity = (Last drawn Basic + DA) × 15 × Years of service ÷ 26

The number 15 means "15 days' wages per year of service" and 26 means "working days in a month" (excluding Sundays). Fractions over 6 months round up to a full year.

For employees not covered under the Act (small employers under 10 staff, some contract workers), the formula changes to ÷30 instead of ÷26, and no part-year rounding applies.

Covered: Basic ₹50,000, 10 years → 50000 × 15 × 10 ÷ 26 = ₹2,88,462

Tax Treatment

The ₹20 lakh limit was raised from ₹10 lakh in March 2018 via the Payment of Gratuity (Amendment) Act, 2018. The limit applies across your entire career — if you've received gratuity from previous employers, subtract that from your ₹20L ceiling.

When Will I Receive It?

Gratuity becomes payable when you leave employment after completing 5 years — on retirement, resignation, termination (except for misconduct), or superannuation. For death or disability, payable regardless of tenure.

The employer must pay within 30 days of it becoming due. Delays attract simple interest at the rate notified by central government (currently around 10%).

If disputes arise, you can file a claim under Form N with the Controlling Authority (usually the Assistant Labour Commissioner) in your state.

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❓ Frequently Asked Questions
When am I eligible for gratuity?›
You become eligible after 5 continuous years of service with the same employer. Exceptions: if you die or become disabled, gratuity is paid regardless of years. For piece-rated, contract or seasonal employees, rules differ slightly.
What is the maximum gratuity payable?›
Under the Payment of Gratuity (Amendment) Act, 2018, the maximum tax-free gratuity is ₹20 lakh. Anything above that is taxable at your slab rate. For government employees, higher ceilings may apply separately.
Why is the formula divided by 26, not 30?›
The law assumes 26 working days per month — 30 days minus 4 Sundays. Your daily wage equals (Basic+DA) ÷ 26. Gratuity = 15 days' wages × years of service, which gives (Basic+DA) × 15 ÷ 26 × years.
How are years of service rounded?›
Any fraction over 6 months counts as a full year. So 7 years 7 months = 8 years. But 7 years 5 months = 7 years. This is per the Act and matters for service periods near a year-boundary.
Can private employers pay more than the formula?›
Yes. The formula gives the minimum statutory gratuity. Employers can pay more as per contract. But tax exemption is still capped at ₹20 lakh — anything above is taxed.
I have less than 5 years — any chance?›
Normally no. But if you complete 4 years and 240+ days in the fifth year, some courts (Madras HC) have held this as 5 years. Check your HR policy and state precedent. For death or disability there is no 5-year requirement.