Gratuity Calculator
The standard 15/26 formula used under the Payment of Gratuity Act, 1972 — with the statutory ₹20 lakh cap and 5-year eligibility rule applied.
Your numbers
₹/mo
Basic salary + dearness allowance only, not your full CTC.
years
More than 6 months in your final year rounds up to a full year.
Result — with the workings shown
Gratuity amount
₹2,07,692
for 8 years of service
How this is worked out
The standard formula is (last drawn basic + DA) × 15 × years ÷ 26 — the 15/26 represents 15 days' pay per year of service, using a 26-day working month. At ₹45,000/mo over 7.5 years of service (rounded to 8 for the >6-months rule), that's ₹2,07,692.
Gratuity you receive is tax-exempt up to ₹20 lakh (across your career, for non-government employees) under Section 10(10) of the Income Tax Act — anything above that limit is taxed as normal income.
Based on the Payment of Gratuity Act, 1972 (15/26 formula, ₹20 lakh statutory cap). Some employers not covered by the Act use a 15/30 formula instead — check your company's policy if you're not sure which applies.
Terms used on this page
- DA
- Dearness Allowance — a cost-of-living adjustment paid on top of basic salary, mainly common in government and PSU jobs. Most private-sector employees have little to no separate DA.
- Gratuity
- A one-time lump sum an employer pays as a thank-you for long service, on top of your final salary and any leave encashment — not a monthly benefit.
- Payment of Gratuity Act, 1972
- The law that entitles employees at covered establishments (10+ employees) to gratuity after 5+ years of service, using the 15/26 formula.