Gratuity Calculator

• Covered under the Act: Gratuity = (15 × Last Drawn Salary × Years of Service) ÷ 26
• Not covered under the Act: Gratuity = (15 × Last Drawn Salary × Years of Service) ÷ 30

The divisor differs because employers covered under the Payment of Gratuity Act, 1972 use 26 working days a month (a 6-day work week minus 4 Sundays), while the formula conventionally used for employees not covered under the Act uses 30 days a month.

Rounding years of service: This calculator rounds your years of service to the nearest whole year before applying the formula, following the common convention: if the fractional part of your service is 0.5 years (6 months) or more, it rounds up to the next full year; otherwise it rounds down. For example, 7 years 7 months (7.58 years) rounds up to 8 years, while 7 years 4 months (7.33 years) rounds down to 7 years.

Eligibility:Gratuity is generally payable only after completing a minimum of 5 years of continuous service with the same employer. The one exception is if employment ends due to the employee's death or disablement — in that case, the 5-year minimum does not apply.

Tax treatment: Gratuity received by employees covered under the Act is tax-exempt up to a ceiling of ₹20 lakh (cumulative across employers, over your working life). This tax-exemption ceiling is separate from the gratuity payable amount calculated here — this calculator does not apply any tax treatment, it only estimates the gratuity amount itself.

Worked example: Last drawn salary (Basic + DA) = ₹50,000/month, Years of Service = 7.5 years, covered under the Act. 7.5 years rounds up to 8 years (fraction = 0.5). Gratuity = (15 × 50,000 × 8) ÷ 26 = 60,00,000 ÷ 26 ≈ ₹2,30,769. If the same employee were not covered under the Act, Gratuity = (15 × 50,000 × 8) ÷ 30 = 60,00,000 ÷ 30 = ₹2,00,000.