Gratuity Calculator

For an employer covered by the Payment of Gratuity Act: last drawn basic + DA × 15 ÷ 26 × years of service. ₹60,000 a month after 12 years and 7 months — which the Act counts as 13 years — is 60,000 × 15 ÷ 26 × 13 = ₹4,50,000. The 26 is working days in a month; the 15 is half of the 30-day month the Act pays for each year.

Section 4(2) of the Act pays fifteen days’ wages per year, and section 2(s) read with the Supreme Court’s decision in Digvijay Woollen Mills (1980) fixes a month at 26 working days for the purpose. So a day’s wage is the monthly wage ÷ 26, and 15 of them is 15/26 of the month — about 57.7%, not 50%. Employers outside the Act use 15/30, which is exactly half a month.

For a non-government employee, the exempt amount under section 10(10) is the least of three: the formula amount, ₹20 lakh, and the gratuity actually received. Anything above that is taxed as salary in the year received. The ₹20 lakh is a lifetime limit across employers. Government employees’ gratuity is wholly exempt.

Under the Act’s text, five completed years of continuous service are required before any gratuity is due; the six-month rounding applies only to the years beyond that. Some High Courts (Madras, in Mettur Beardsell, 1998) have held that 4 years and 240 days satisfies the requirement, and some employers pay on that basis, but it is not settled nationally. The calculator applies the five-year rule and states it.

The Code on Social Security 2020, in force since 21 November 2025, keeps the 15/26 formula and the ₹20 lakh ceiling. Two things changed: fixed-term employees now qualify after one year, pro rata; and "wages" is defined so that excluded allowances (HRA, bonus, overtime) cannot exceed half of total pay — any excess counts as wages, which raises the gratuity base where basic had been kept low. Enter the basic + DA your payslip shows under the Code; the calculator applies the formula to whatever base you give it.

Gratuity = last drawn basic plus DA × 15/26 × completed years of service, for employers covered by the Payment of Gratuity Act. The 15/26 in the gratuity formula is fifteen days of pay for each year, with a month taken as 26 working days. Service of more than six months in the final year rounds up to a full year. On a last basic plus DA of ₹50,000 after 12 years and 7 months, the gratuity calculation gives ₹50,000 × 15/26 × 13 = ₹3,75,000. The payout is capped at ₹20 lakh, and the exemption under section 10(10) is the least of the amount received, the formula amount and that ceiling.