Gratuity Calculator India (15/26 Statutory Formula)
Gratuity in India is a statutory retirement and separation benefit paid by employers under Section 4 of the Payment of Gratuity Act, 1972. Calculated using the (15 * [Basic + DA] * Tenure) / 26 formula for employees completing 5+ years of continuous service, it is 100% tax-exempt up to ₹20 Lakhs under Section 10(10).
Service & Salary Parameters
Payment of Gratuity ActCheck your latest payslip for exact Basic Pay (excluding allowances like HRA/Special)
Applicable for Government, PSU, and Bank employees (typically ₹0 for private sector)
Full continuous years completed with current employer
If 6 months or more, rounded up to the next full year under Section 4
Total Gratuity Payable upon Separation
Tax Exemption Breakdown
(15 * ₹60,000 * 6 yrs) / 26
The Payment of Gratuity Act, 1972 defines distinct mathematical mechanics depending on whether the employer establishment is covered under the Act:
// 1. Covered Establishments (Section 4(2) - Standard)
Gratuity = (15 * [Last Drawn Basic Salary + DA] * Effective Years) / 26
Where:
- 26 = Statutory working days per month (excluding 4 Sundays)
- 15 = Half-month wages (15 days pay per completed year)
- Rounding: Remaining service >= 6 months is rounded up to the next full year
// 2. Non-Covered Establishments
Gratuity = (15 * [Last Drawn Basic Salary + DA] * Completed Years) / 30
// 3. Tax Exemption Limit under Section 10(10)
Tax-Exempt Gratuity = MIN(Total Gratuity, ₹20,00,000 Statutory Cap)
Taxable Gratuity = MAX(0, Total Gratuity - ₹20,00,000)
Scenario: Vikram resigns from a private software firm in Hyderabad after completing 8 years and 7 months of continuous service. His last drawn monthly basic pay was ₹75,000 (Dearness Allowance = ₹0).
| Step | Calculation Factor | Value | Statutory Basis |
|---|---|---|---|
| 1. Wage Base | Last Drawn Basic + DA | ₹75,000 | Excludes HRA & bonuses |
| 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 | Standard 26 working days divisor |
| 4. Total Gratuity Payout | Final Amount | ₹3,89,423 | 100% Tax-Free (< ₹20 Lakhs) |
Gratuity Payout Matrix by Basic Salary & Service Tenure
| 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 (Capped) |
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