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Calculate your gratuity payout, tax exemptions, and eligibility under the Payment of Gratuity Act 1972 & 2025 Labour Codes.
15/26 formula applies. ≥6 months in final year rounds up to +1 year. Mandatory 5 yrs service.
Enter Basic Pay + Dearness Allowance (DA) from payslip. Exclude HRA, Special Allowance & Bonus.
₹2.88 L
Eligible! Based on 10 years counted.
Visual growth curve of your gratuity benefit over service tenure.
See how your gratuity entitlement grows from Year 1 to 30.
| Service Tenure | Applied Formula | Gratuity Payable | Tax-Free Limit | Taxable Amount |
|---|---|---|---|---|
| 1 Year | 15/26 × Basic × Yrs | ₹0 (Ineligible) | ₹0 | ₹0 |
| 2 Years | 15/26 × Basic × Yrs | ₹0 (Ineligible) | ₹0 | ₹0 |
| 3 Years | 15/26 × Basic × Yrs | ₹0 (Ineligible) | ₹0 | ₹0 |
| 4 Years | 15/26 × Basic × Yrs | ₹0 (Ineligible) | ₹0 | ₹0 |
| 5 Years | 15/26 × Basic × Yrs | ₹1.44 L | ₹1.44 L | ₹0 |
| 6 Years | 15/26 × Basic × Yrs | ₹1.73 L | ₹1.73 L | ₹0 |
| 7 Years | 15/26 × Basic × Yrs | ₹2.02 L | ₹2.02 L | ₹0 |
| 8 Years | 15/26 × Basic × Yrs | ₹2.31 L | ₹2.31 L | ₹0 |
| 9 Years | 15/26 × Basic × Yrs | ₹2.60 L | ₹2.60 L | ₹0 |
| 10 YearsYour Input | 15/26 × Basic × Yrs | ₹2.88 L | ₹2.88 L | ₹0 |
| 11 Years | 15/26 × Basic × Yrs | ₹3.17 L | ₹3.17 L | ₹0 |
| 12 Years | 15/26 × Basic × Yrs | ₹3.46 L | ₹3.46 L | ₹0 |
| 13 Years | 15/26 × Basic × Yrs | ₹3.75 L | ₹3.75 L | ₹0 |
| 14 Years | 15/26 × Basic × Yrs | ₹4.04 L | ₹4.04 L | ₹0 |
| 15 Years | 15/26 × Basic × Yrs | ₹4.33 L | ₹4.33 L | ₹0 |
| 16 Years | 15/26 × Basic × Yrs | ₹4.62 L | ₹4.62 L | ₹0 |
| 17 Years | 15/26 × Basic × Yrs | ₹4.90 L | ₹4.90 L | ₹0 |
| 18 Years | 15/26 × Basic × Yrs | ₹5.19 L | ₹5.19 L | ₹0 |
| 19 Years | 15/26 × Basic × Yrs | ₹5.48 L | ₹5.48 L | ₹0 |
| 20 Years | 15/26 × Basic × Yrs | ₹5.77 L | ₹5.77 L | ₹0 |
Why 26 is used instead of 30, the 4-year 240-day court precedent, contract employee rules, and claiming the ₹20 Lakh tax exemption.
Gratuity is a statutory monetary benefit provided by an employer to an employee in recognition of long-term continuous service. It is governed primarily by the Payment of Gratuity Act, 1972 and updated under the Code on Social Security, 2020.
Whether you are planning a resignation, job change, or retirement, understanding gratuity calculation formulas, 6-month rounding rules, and tax exemption thresholds ensures you claim your exact statutory dues.
Applies to private & PSU organizations with 10 or more employees.
Why 26? The law assumes 26 working days in a month (excluding 4 Sundays), crediting 15 days of wages per year served.
Applies when employer is not covered under the Gratuity Act (governed by IT Act §10(10)(iii)).
Denominator uses 30 calendar days. Only full completed years count (partial months dropped).
Gratuity is calculated strictly on your last drawn Basic Salary + Dearness Allowance (DA). Components like HRA, Special Allowance, Conveyance, and Bonus are excluded. Under the Code on Wages, Basic Salary + DA must constitute at least 50% of your total CTC.
Under the Code on Social Security 2020, Fixed-Term (Contractual) employees are eligible for pro-rata gratuity after completing just 1 year of continuous service. They no longer need to complete the 5-year threshold required for permanent staff.
Yes. Under Section 2A of the Act and landmark High Court rulings (e.g., Mettur Beardsell Ltd), completing 4 full years plus 240 working days in the 5th year (approx 4 years 8 months) legally fulfills the mandatory 5-year continuous service requirement.
For private sector employees, the maximum lifetime tax-exempt gratuity cap under Section 10(10) is ₹20 Lakhs. Central and State Government employees enjoy 100% tax-free status without an upper limit.
Employers with 10+ staff are Covered under the Act and use the 15/26 formula with partial-year rounding (≥6 months = +1 yr). Uncovered employers use the 15/30 formula under IT Act §10(10)(iii) counting completed years only.
No. Once you satisfy the continuous service requirement (5 years for permanent, 1 year for contractual), gratuity is your statutory right. An employer cannot withhold payment due to voluntary resignation.
The mandatory 5-year or 1-year service condition is waived entirely if an employee passes away or suffers permanent disablement due to accident or illness. The accumulated gratuity is paid directly to the nominee or legal heir.
Yes, companies typically include gratuity in the CTC structure at ~4.81% of Basic Salary annually as an employer accrual provision. However, it is paid out upon exit only after satisfying eligibility criteria.
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