Gratuity Calculator (Payment of Gratuity Act 1972)
Calculate your statutory retirement or job-switch gratuity payout, eligibility criteria, and tax exemption limits in India.
Statutory entitlement after 8 years of service
*Computed using statutory formula: 15 × (Basic+DA) × Tenure / 26. Tax-free up to ₹20 Lakhs.
Important Educational Disclaimer for Calculator Results:
Calculations are estimates based on your entered inputs and selected return or inflation assumptions. Results are illustrative, hypothetical, and not guaranteed. Actual market returns, interest rates, tax liabilities, and inflation rates will vary and may materially alter your final outcome. This calculator does not constitute financial, investment, or tax advice.
How much gratuity are you legally entitled to?
With a last drawn monthly Basic Salary + Dearness Allowance (DA) of ₹60,000 and 8 years of continuous service, your statutory gratuity payout is ₹2,76,923.
- Total Statutory Gratuity: ₹2,76,923.
- Tax-Exempt Portion: ₹2,76,923 (Completely exempt under Section 10(10) up to the ₹20 Lakh lifetime ceiling).
- Taxable Portion: ₹0.
- 5-Year Eligibility Rule: Under the Payment of Gratuity Act 1972, completing 5 continuous years with an employer is mandatory to claim gratuity (waived in case of death or permanent disablement).
How This Calculator Works
Calculates 15 days of wages for every completed year of service, where 1 month of wages is taken as 26 working days (excluding 4 Sundays). Any service period exceeding 6 months in the final year is rounded up to the next full year.
Gratuity = (15 × Last Drawn Basic Salary + DA × Tenure in Years) / 26Variables in Formula:
Worked Step-by-Step Example
A salaried employee leaves after 8 years of service with a last drawn Basic Salary of ₹60,000/month.
Key takeaway: The company must legally disburse ₹2,76,923 as part of the full & final settlement (FnF), completely free of income tax.
Common Mistakes to Avoid
⚠ Leaving at 4 years and 11 months
Unless an employee completes 5 continuous years (or 4 years and 240 days in certain judicial precedents), the company is not legally obligated to pay gratuity.
⚠ Using Gross CTC instead of Basic + DA
Gratuity is strictly calculated on Basic Salary + DA. Special allowances, HRA, and incentives are excluded from the statutory wage base.
Frequently Asked Questions
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