Gratuity Calculator India (15/26 Formula & Central Govt ₹25L Limit)
Gratuity in India is a statutory separation benefit paid to employees completing 5+ years of service. Under Section 4 of the Payment of Gratuity Act 1972, private sector gratuity is computed using the (15 × [Basic + DA] × Tenure) / 26 formula (capped at ₹20 Lakhs). For Central Government employees, the maximum DCRG ceiling was statutorily enhanced to ₹25 Lakhs effective 2024 upon DA hitting 50%.
Service & Pay Parameters
Gratuity Act (15/26)Basic pay as stated on your last pay slip (excluding HRA, conveyance, special allowance)
Applicable for PSU / Bank / Govt employees; typically ₹0 for private IT/corporate sector
Total full continuous years completed with current employer/service
6+ months rounded up to next full year under Section 4(2)
Calculated as (15 × Monthly Wage × Tenure) ÷ 26. Covers factories, mines, ports, and establishments with 10+ employees. Max tax exemption is ₹20 Lakhs.
Total Gratuity Payable upon Separation
Tax Exemption Breakdown
(15 * ₹60,000 * 6 yrs) / 26
Indian statutory provisions define distinct calculation methodologies for private sector employees versus Central Government personnel:
For establishments with 10+ employees covered under Section 4(2):
- 26 Working Days: Monthly wage divisor excluding 4 Sundays.
- 6-Month Rounding: Service of ≥6 months rounds up to the next full year.
- Statutory Cap: ₹20,00,000 tax-free limit under Sec 10(10)(ii).
Under Rule 50 of CCS (Pension) Rules & DoPPW Order No. 28/03/2024:
- 6-Month Units: Measured in completed 6-monthly intervals.
- 16.5x Pay Ceiling: Capped at 66 periods (33 years of service).
- Enhanced Cap: Statutorily raised from ₹20L to ₹25L upon 50% DA.
- 100% Tax-Free: Fully exempt under Section 10(10)(i).
For establishments not registered under the Payment of Gratuity Act:
- 30 Calendar Days: Divisor represents full month days.
- No Rounding: Fractional months are disregarded.
- Exemption: Capped at ₹20,00,000 under Sec 10(10)(iii).
Statutory Comparison: Central Government DCRG vs Private Sector Gratuity
| Parameter | Central Government (CCS Pension Rules) | Private Sector (Covered under 1972 Act) | Private Sector (Non-Covered) |
|---|---|---|---|
| Governing Statute | Rule 50, CCS (Pension) Rules 2021 | Payment of Gratuity Act, 1972 (Sec 4) | Income Tax Act Section 10(10)(iii) |
| Calculation Formula | (Emoluments / 4) × 6-Mo Periods | (15 × Wage × Years) / 26 | (15 × Wage × Years) / 30 |
| Maximum Statutory Limit | ₹25,00,000 (Hiked in 2024) | ₹20,00,000 | ₹20,00,000 |
| Income Tax Status | 100% Tax-Exempt (Sec 10(10)(i)) | Tax-free up to ₹20L (Sec 10(10)(ii)) | Tax-free up to ₹20L (Sec 10(10)(iii)) |
| Rounding of Service Tenure | Completed 6-month intervals counted | ≥6 months rounded up to full year | Completed full years only (no rounding) |
| Maximum Wage Multiple Cap | 16.5 × monthly emoluments (33 yrs) | No multiple cap (subject to ₹20L) | No multiple cap (subject to ₹20L) |
1Private Sector: Resignation After 8 Years and 7 Months
Vikram resigns from a private software firm in Bengaluru after 8 years and 7 months of continuous service. His last drawn monthly basic pay was ₹75,000 (DA = ₹0).
| Step | Calculation Factor | Value | Statutory Basis |
|---|---|---|---|
| 1. Monthly Wage Base | Basic + DA | ₹75,000 | Excludes HRA & variable bonus |
| 2. Service Tenure | 8 Years, 7 Months | 9 Full Years | 7 months ≥ 6 months rounded up |
| 3. Formula Applied | (15 × 75,000 × 9) / 26 | 1,01,25,000 / 26 | 26 statutory working days divisor |
| 4. Total Gratuity Payout | Net Payout | ₹3,89,423 | 100% Tax-Free (< ₹20 Lakhs) |
2Central Government: Superannuation Under 7th CPC (32 Years Service)
Ramesh retires as a Joint Secretary / Director (Pay Level 13) after 32 years and 2 months of qualifying service. His last drawn Basic Pay is ₹1,25,000 and DA is ₹62,500 (50% DA).
| Step | Calculation Factor | Value | Statutory Basis |
|---|---|---|---|
| 1. Monthly Emoluments | Basic + DA (50%) | ₹1,87,500 | ₹1,25,000 + ₹62,500 |
| 2. Qualifying Periods | 32 Years × 2 | 64 Six-Month Periods | 2 fractional months disregarded (<6m) |
| 3. Formula Applied | (1,87,500 / 4) × 64 | 46,875 × 64 | Rule 50 CCS Pension Rules |
| 4. Total Gratuity Payout | Final DCRG Received | ₹25,00,000 (Capped) | Capped at revised ₹25L statutory limit (100% Tax-Free) |
Gratuity Payout Matrix by Basic Salary & Service Tenure (15/26 Formula)
| Monthly Basic Pay | 5 Years Service | 10 Years Service | 15 Years Service | 20 Years Service | 25 Years Service |
|---|---|---|---|---|---|
| ₹30,000 | ₹86,538 | ₹1,73,077 | ₹2,59,615 | ₹3,46,154 | ₹4,32,692 |
| ₹50,000 | ₹1,44,231 | ₹2,88,462 | ₹4,32,692 | ₹5,76,923 | ₹7,21,154 |
| ₹80,000 | ₹2,30,769 | ₹4,61,538 | ₹6,92,308 | ₹9,23,077 | ₹11,53,846 |
| ₹1,20,000 | ₹3,46,154 | ₹6,92,308 | ₹10,38,462 | ₹13,84,615 | ₹17,30,769 |
| ₹1,50,000 | ₹4,32,692 | ₹8,65,385 | ₹12,98,077 | ₹17,30,769 | ₹20,00,000 (Private Cap) |
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