Gratuity Calculator

Estimate your gratuity under the Payment of Gratuity Act from your last-drawn monthly Basic+DA and your years of service. The calculation is capped at ₹20,00,000. Everything runs in your browser — nothing you type is sent anywhere.

How gratuity is calculated

For employees covered by the Payment of Gratuity Act, the formula is:

gratuity = (15 × last-drawn monthly Basic+DA × years of service) ÷ 26

The 15/26 represents 15 days of wages for every completed year of service, based on a 26-day working month. The calculator then applies Math.min(result, 2000000) so the figure never exceeds the ₹20,00,000 statutory ceiling. For example, ₹50,000 monthly Basic+DA over 10 years gives (15 × 50,000 × 10) ÷ 26 ≈ ₹2,88,462.

The ₹20 lakh cap

The maximum gratuity payable under the Act is ₹20,00,000, and the same ₹20 lakh is the ceiling for the tax exemption. If your formula result is higher, the payout (and the exemption) are limited to ₹20 lakh, and anything beyond the exempt amount is taxable as salary. Exemption rules differ for government employees and for staff not covered by the Act.

Rounding your years of service

Under the Act, a year is rounded up when you have worked more than six months in it, and dropped when it is six months or less. So 7 years and 8 months counts as 8 years, while 7 years and 3 months counts as 7. This calculator accepts decimal years and applies that rounding for you. Most employees become eligible for gratuity after completing five years of continuous service.

Frequently asked questions

How is gratuity calculated?

For employees covered by the Payment of Gratuity Act, gratuity is (15 × last-drawn monthly Basic+DA × years of service) ÷ 26. The 15/26 reflects 15 days of wages for each completed year, based on a 26-day working month. The result is capped at ₹20,00,000. This is illustrative — your figures depend on your actual salary and service.

What is the maximum gratuity?

The maximum gratuity payable under the Payment of Gratuity Act is ₹20,00,000. The same ₹20 lakh is also the ceiling for the tax exemption on gratuity. Amounts above the formula or the cap are limited to ₹20 lakh in this calculator.

How are part-years of service counted?

Under the Act, a year is rounded up if you have worked more than six months in it; six months or less is dropped. For example, 5 years and 7 months counts as 6 years, while 5 years and 4 months counts as 5. This calculator accepts decimal years and applies that rounding for you.

Is gratuity taxable?

For employees covered by the Payment of Gratuity Act, gratuity is exempt from tax up to ₹20,00,000 (subject to the formula limits). Anything above the exempt amount is taxable as salary. The exemption rules differ for government employees and for those not covered by the Act, so check your specific situation.