Gratuity Calculator – Calculate Payment of Gratuity Act 1972 & Tax Exemption
Calculate gratuity payout as per Payment of Gratuity Act 1972 (15/26 formula), Section 10(10) ₹20 Lakhs tax exemption limit, and tenure progression schedule table.
Min 5 years required for eligibility
> 6 months rounded up to next full year
Gratuity Progression by Years of Continuous Service
| Service Tenure | Eligibility Status | Formula Multiplier | Tax Exemption | Gratuity Amount |
|---|
How to Use this Calculator & Formula Breakdown
Step 1: Input Financial Parameters
Enter your last drawn monthly Basic Salary + Dearness Allowance (DA).
Step 2: Instant Client-Side Computation
Set completed years and months of continuous service (min 5 years required).
Step 3: Analyze Visual Breakdown & Amortization
Explore live interactive Chart.js donut chart, tax-free exemption status, and full tenure progression schedule table.
Mathematical Algorithm & Formula
Frequently Asked Questions (FAQs)
What is Gratuity and how is it calculated in India?
Gratuity is a statutory monetary benefit paid by employers to employees in recognition of continuous service under the Payment of Gratuity Act 1972. Formula: Gratuity = (15 × Last Drawn Basic + DA × Completed Years of Service) / 26.
What is the minimum eligibility criteria to receive Gratuity?
An employee must complete at least 5 years of continuous service with the same employer to become eligible for gratuity upon resignation, retirement, or termination.
Why is 26 used as the divisor in the Gratuity calculation formula?
Under the Payment of Gratuity Act 1972, a working month is counted as 26 working days (excluding 4 Sundays), making 15 days of salary equal to (15 / 26) of the monthly basic + DA.
How does the rounding rule work for additional months of service?
If an employee works for more than 6 months in their final year of service (e.g., 7 years and 7 months), it is rounded UP to the next full year (8 years) for calculation.
What is the tax exemption limit on Gratuity under Section 10(10)?
Gratuity received by non-government employees is 100% tax-exempt up to a lifetime statutory limit of ₹20 Lakhs under Section 10(10). Any excess above ₹20 Lakhs is taxable.
Is Gratuity paid in case of an employee’s death before 5 years?
Yes! The mandatory 5-year continuous service rule does NOT apply in the unfortunate event of an employee’s death or permanent total disablement.
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