Gratuity Calculator

Employees who have completed at least 5 years of continuous service with an employer covered under the Payment of Gratuity Act (establishments with 10+ employees), with exceptions for death or disability where the 5-year rule doesn't apply.

The Act's formula assumes 26 working days per month (excluding 4 Sundays), a standard convention for gratuity and several other Indian statutory payroll calculations.

Government employees receive gratuity entirely tax-free. Private-sector employees get a tax exemption up to ₹20 lakh (the statutory ceiling), with any amount above that taxed as salary income.

Service is rounded to the nearest whole year before the formula runs. At a ₹45,000 last salary, 12 years and 4 months of service (12.4 years) stays at 12 years and gives ₹3,11,538.46, but 12 years and 6 months (12.5 years) rounds up to a full 13 years and gives ₹3,37,500 - the same result as if you had served exactly 13 years. Anything under 6 months in the final year rounds down instead.

The formula still computes the raw amount first, but the output is capped at the statutory ₹20 lakh ceiling once that raw figure exceeds it. For example, a ₹3,00,000 last salary with 35 years of service produces a gratuity amount of exactly ₹20,00,000 with the "capped at statutory limit" flag set to true, even though the uncapped formula would work out to a larger number.

This calculator's formula follows the Payment of Gratuity Act, which covers establishments with 10 or more employees. If your employer has fewer employees, the statutory formula used here may not apply automatically - confirm your entitlement with your employer's HR department.

The Act generally requires 5 years of continuous service before gratuity becomes payable, except in cases of death or disability, where the 5-year requirement doesn't apply. Outside those exceptions, service under 5 years typically isn't eligible under the Act.

This calculator provides a general estimate only, not legal or financial advice. Your employer's HR department applies the exact statutory rules, any applicable exceptions, and your official service records, so always confirm your precise entitlement with them.