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Gratuity Calculator India 2026 - Payment of Gratuity Act Estimator

Compute gratuity payable under Section 4 of the Payment of Gratuity Act, 1972. Includes 5-year eligibility check, death and disability waiver, and Rs 20 lakh statutory cap.

Step 1 - Inputs

Your service details

Service over 6 months in last year rounds up to a full year (Section 4)

Step 2 - Result

Gratuity Computation

Eligibility

Eligible

Gratuity Payable

Rs 0

Formula: (Basic + DA) x 15/26 x years

Estimate only. Final amount depends on actual last-drawn wage, completed service period, and applicable category under the Act.

Formula Logic

How Indian Gratuity Calculation Works

5-Year Eligibility

Continuous service of 5 years required under Section 4(1) of the Payment of Gratuity Act, 1972.

Death / Disability Waiver

The 5-year rule is waived on death or disability under the proviso to Section 4(1).

15/26 Formula

For covered employees: (Basic + DA) x 15/26 x completed years. The denominator 26 reflects working days per month.

15/30 for Non-Covered

Employees outside the Act use 15/30 by employer policy. Service of less than 6 months in the final year does not round up.

Rs 20 Lakh Cap

Maximum statutory gratuity capped at Rs 20 lakh under Section 4(3) of the Payment of Gratuity Act, 1972.

Tax Exemption

Up to Rs 20 lakh tax-exempt under Section 10(10) of the Income Tax Act, 1961. Excess is taxable as salary.

Worked Example

Last drawn Basic + DA = Rs 40,000. Service = 10 years.

  • Gratuity = (40,000 x 15 / 26) x 10 = Rs 2,30,769
  • Eligibility: 10 years >= 5 years Pass
  • Statutory cap: Rs 20,00,000 Not breached
  • Tax exemption under Section 10(10): Full amount exempt

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Gratuity Calculator FAQ

How is gratuity calculated in India?
Gratuity equals (Last drawn Basic + DA) multiplied by 15/26 multiplied by completed years of service. The formula applies to employees covered under the Payment of Gratuity Act, 1972. Service over 6 months in the last year rounds up to a full year.
Who is eligible for gratuity in India?
An employee with 5 years of continuous service under Section 4(1) of the Payment of Gratuity Act, 1972 qualifies for gratuity. The 5-year rule is waived if the employee dies or becomes disabled during service.
What is the maximum gratuity amount in India?
The statutory ceiling is Rs 20 lakh under Section 4(3) of the Payment of Gratuity Act, 1972. Government employees and certain public-sector employees may receive gratuity above this cap. Tax exemption under Section 10(10) of the Income Tax Act, 1961 also caps at Rs 20 lakh for non-government employees.
Is gratuity taxable in India?
Gratuity received by government employees is fully exempt. For private-sector employees covered under the Act, exemption is the least of actual gratuity, Rs 20 lakh, or (last salary x 15/26) x years of service. Amounts above Rs 20 lakh are taxable as salary.
When must employer pay gratuity?
The employer must pay gratuity within 30 days from the date it becomes payable under Section 7(3) of the Payment of Gratuity Act, 1972. Delayed payments attract simple interest at the rate notified by the Central Government.
What happens to gratuity on death of employee?
On death, the 5-year continuous service rule is waived under the proviso to Section 4(1). Gratuity is paid to the nominee in Form F or, in the absence of nomination, to the legal heir. The amount is fully tax-exempt in the hands of the nominee or legal heir.

Provision Gratuity Every Month

factoHR India provisions gratuity at 4.81 percent of Basic, tracks tenure, and computes exit payouts within 30 days.

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