Gratuity Calculator

In India, Gratuity is a statutory monetary benefit paid by an employer to an employee for rendering continuous service for at least 5 years. It is strictly governed by the Payment of Gratuity Act, 1972.

If your company is covered under the Act, the formula is legally defined as:

Gratuity = (15 / 26) * Last Drawn Salary * Years of Service

• Last Drawn Salary: This only includes your Basic Salary plus Dearness Allowance (DA). It legally cannot include HRA, bonuses, or other special allowances.
• 15 / 26: You are paid for 15 days of wages for every year of service. The law specifically considers a working month to be 26 days (excluding 4 Sundays), not 30 days.
• Years of Service: If you work for more than 6 months in your final year, the law mandates it is rounded up to the next full year.

As per current tax laws, Gratuity received up to a maximum limit of ₹20 Lakhs is completely tax-free under Section 10(10) of the Income Tax Act.

Any gratuity amount exceeding this 20 Lakh limit is fully taxable as per your standard income slab rate.