Work out exactly what an employee is owed under the Payment of Gratuity Act, 1972 — with the six-month rounding rule and the ₹20 lakh statutory ceiling already applied. Everything is calculated in your browser; nothing you type is sent anywhere.
| Salary considered (Basic + DA) | — |
| Service counted | — |
| Days paid per year | 15 |
| Divisor | 26 |
| Gratuity | — |
Gratuity is a lump sum an employer pays for long service. It is a statutory right, not a bonus: once the Payment of Gratuity Act, 1972 applies to an establishment, the payment is compulsory and enforceable.
The 15 is fifteen days' wages for every completed year. The 26 is the number of working days in a month once the four weekly offs are removed — which is why the effective rate works out slightly higher than half a month's pay per year.
Only basic pay plus dearness allowance. HRA, conveyance, special allowance, bonuses and employer PF contribution are all excluded. This is the single most common mistake — using gross salary or CTC inflates the figure substantially.
This rounding is specific to establishments covered by the Act. Employers outside it commonly pay on completed years only, using a divisor of 30 rather than 26.
Five years of continuous service is the general rule. It is waived entirely where employment ends because of death or disablement — in that case gratuity is payable no matter how short the service was, and it goes to the nominee.
Gratuity under the Act is capped at ₹20,00,000, raised from ₹10 lakh in 2018. An employer may pay more, but the excess is ex gratia rather than statutory gratuity, and is treated differently for tax.
An employee with a basic + DA of ₹45,000 leaves after 7 years and 7 months at a covered employer. The 7 months rounds the service up to 8 years:
For an employer covered by the Payment of Gratuity Act, 1972, gratuity = (15 × last drawn salary × years of service) ÷ 26. "Last drawn salary" means basic pay plus dearness allowance, and 26 represents the working days in a month. For establishments outside the Act, the divisor is 30 instead of 26.
Five years of continuous service with the same employer. The five-year condition is waived if service ends because of the employee's death or disablement due to accident or disease — gratuity is then payable regardless of how long they worked.
Yes, for employers covered by the Act. Section 4(2) rounds any part-year over six months up to a full year, and drops a part-year of six months or less. So 7 years and 7 months counts as 8 years, while 7 years and 5 months counts as 7 years.
The statutory ceiling is ₹20,00,000. Anything an employer pays above that is ex gratia rather than gratuity under the Act, and is taxed differently.
For non-government employees covered by the Act, gratuity is exempt from income tax up to the least of: ₹20,00,000, the actual gratuity received, or 15 days' salary for each completed year of service. Anything beyond that exemption is taxable as salary income. Government employees receive gratuity fully exempt.
Within 30 days of it becoming payable. Beyond 30 days the employer owes simple interest on the amount for the delayed period, at the rate notified by the central government.
This calculator implements the Payment of Gratuity Act, 1972 as it stands in 2026 and is provided for general guidance. Settlement disputes, tax treatment and state-specific rules can change the outcome — confirm with a qualified advisor before relying on a figure.
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