Planning calculator
Gratuity Calculator
Gratuity is a statutory payment your employer owes you for long service. The formula is short, the rounding rule catches people out, and the exemption ceiling applies across your whole career.
Your numbers
Basic pay plus dearness allowance only — not your full CTC.
Six months or more rounds the final year up.
Establishments with ten or more employees are covered. Covered employers divide by 26 working days; others divide by 30.
Gratuity payable
₹3,46,154
Based on 10 years of service at ₹60,000 a month. Of this, ₹3,46,154 is exempt from tax.
- Years counted
- 10
- Tax-free
- ₹3,46,154
- Taxable
- ₹0
What another five years is worth
Entitlement at ₹60,000 a month, by length of service. Gratuity scales linearly with years — and with your final salary, which is why it grows fastest at the end.
How this was worked out
- 1Service of 10 years and 0 months counts as 10 years — a part-year of six months or more rounds up under the Act.
- 215 × ₹60,000 × 10 ÷ 26 = ₹3,46,154
- 3Exemption is capped at ₹20,00,000 across your working life, leaving ₹0 taxable here.
The arithmetic
How this calculator works
No proprietary model, no adjustment factor we will not name. This is the standard formula, applied exactly as written.
Covered by the Act:
G = 15 × last drawn monthly salary × years ÷ 26
Not covered by the Act:
G = 15 × average monthly salary × completed years ÷ 30
Salary means basic pay + dearness allowance.
Exemption is capped at ₹20,00,000 across a career.- 15
- Fifteen days of salary for each year of service
- 26
- Working days in a month, for employers covered by the Act
- 30
- Calendar days, used by employers outside the Act
- years
- Completed years, rounding up at six months if covered
- Under the Act, a part-year of six months or more counts as a full year — so eleven years and seven months is paid as twelve. Outside the Act, only completed years count and the seven months are ignored.
- The ₹20,00,000 ceiling is a lifetime limit on the tax exemption, not a limit on what an employer may pay. Anything above it is added to income and taxed at your slab rate.
Worked example
The same maths, on real numbers
An employee leaving after ten years and seven months, on a final basic plus DA of ₹60,000, at an employer covered by the Act.
| Basic + DA | ₹60,000 / month |
|---|---|
| Service | 10 years 7 months |
| Coverage | Covered by the Act |
| Years counted | 11 |
| Gratuity payable | ₹3,80,769 |
| Taxable portion | Nil |
The seven months round up to a full year, adding roughly ₹34,600 to the payment. That rounding rule is worth knowing before you set a resignation date — leaving at ten years and five months instead of ten years and seven would have cost that amount outright. Note also what the formula rewards: gratuity uses your final salary, not an average, so the entitlement grows fastest in the years when your pay is highest.
What this calculator assumes
- Service has been continuous with the same employer.
- The salary entered is basic pay plus dearness allowance only — not your full CTC.
- For covered employers, a part-year of six months or more rounds the final year up.
- The ₹20,00,000 exemption has not already been used at a previous employer.
What it deliberately leaves out
- The five-year requirement is waived on death or disablement; that case is not modelled here.
- Some employers pay more than the statutory minimum under their own policy. This computes the entitlement under the Act, not any contractual enhancement.
- Rules differ for seasonal establishments and for piece-rated employees.
Questions about the gratuity calculation
Generally no — the Act requires five years of continuous service. Courts have accepted four years and 240 days in the fifth year as sufficient in some cases, but it is not automatic and depends on your establishment. If you are close, the timing of your exit is worth a conversation with HR before you commit to a date.
For private-sector employees, it is exempt up to ₹20,00,000 across your entire working life. Anything beyond that is added to your income and taxed at your slab rate. Government employees receive gratuity fully exempt.
No. Only basic pay plus dearness allowance, at the rate last drawn. HRA, bonuses, allowances and employer PF are all excluded, which is why the entitlement is usually far smaller than people expect from a CTC figure.
Related calculators
Decisions rarely sit on their own. These are the tools people usually open next.
Have the numbers?
You have the numbers. Now build the plan.
A calculator answers one question well. A plan decides which questions are worth asking in the first place — and in what order.