Calculate gratuity amount under Payment of Gratuity Act
Gratuity Calculator is a comprehensive financial calculator designed to help you calculate gratuity amount under payment of gratuity act. Planning finances requires absolute precision; this calculator provides instant accurate projections for EMIs, compounding, loans, and investment portfolio returns.
Gratuity = (15 x last drawn monthly salary x years of service) / 26. Salary means basic plus dearness allowance. For ₹50,000 and 5 years, it is 15 x 50,000 x 5 / 26, which is about ₹1,44,231. The 26 stands for working days in a month.
Generally an employee needs at least 5 years of continuous service with the employer, and it is payable on retirement, resignation, or termination. The 5-year condition is usually waived for death or disablement. Rules can change, so confirm with your HR or the current Act.
The usual practice is that a part year of more than six months counts as a full year, and six months or less is ignored. This calculator simply rounds your years to the nearest whole number, so treat borderline cases such as exactly 6 months with care.
Gratuity is exempt from tax up to a limit under Section 10(10) of the Income Tax Act, and the amount above the limit is taxable. This tool uses a ₹20,00,000 limit to show exempt and taxable parts. Limits and rules can change, so check the current Income Tax provisions.
It uses last drawn basic salary plus dearness allowance, not CTC or gross pay. Allowances such as HRA, bonus and special allowance are normally left out. Enter only basic plus DA in the tool, or the result will come out too high.
The Act treats a month as 26 working days, so a day of pay is monthly salary / 26. Fifteen days of that pay per year of service gives 15/26 of a month. Some employers not covered by the Act use a different basis, so check your appointment terms.
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A reducing interest rate means interest is charged only on the remaining outstanding principal balance at the end of each period, rather than the initial loan amount.