Gratuity Calculator
Calculate the gratuity payable under the Payment of Gratuity Act, 1972
Gratuity Payable
₹2,88,462
- Reckonable Years
- 10
- Formula Amount
- ₹2,88,462
Below the ₹20 lakh statutory ceiling, so the formula amount is payable in full.
How the figure is built
- Last drawn salary (basic + DA)
- ₹50,000
- Service entered
- 10 years
- Reckonable years
- 10
- Days per year
- 15
- Divisor
- 26
- Formula amount
- ₹2,88,462
- Statutory ceiling
- ₹20,00,000
- Payable
- ₹2,88,462
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How this is calculated
Formula
gratuity = (last drawn salary × 15 × reckonable years) ÷ 26
- last drawn salary
- = basic pay + dearness allowance
- 15
- = days of pay earned per completed year
- 26
- = assumed working days in a month, for a covered establishment
With your numbers
- 1Check eligibilityservice ≥ 5 years10 years — qualifying period met
- 2Round the servicepart-year over six months rounds up10 → 10 reckonable years
- 3Apply the formula(salary × 15 × years) ÷ 26(₹50,000 × 15 × 10) ÷ 26 = ₹2,88,462
- 4Apply the ceilingpayable = min(formula amount, ₹20,00,000)₹2,88,462 is below the ₹20,00,000 ceiling → paid in full
- The divisor is 26 for a covered establishment because the Act treats a month as 26 working days — which is why the same salary and service yield about 15% more inside the Act than outside it.
- The rounding rule differs too: covered service rounds a part-year over six months up to a full year, while outside the Act only completed years count.
- The ₹20 lakh ceiling is a lifetime limit across all employers. An employer can pay above it voluntarily, but the excess is taxable in your hands.
- Salary means basic plus DA. Feeding in CTC is the most common way this calculation goes wrong, and it goes wrong in the employee’s favour, so it disappoints later.
What is gratuity?
A statutory lump sum an employer owes an employee who leaves after five or more years of continuous service, under the Payment of Gratuity Act, 1972.
It is a legal obligation, not a benefit at the employer’s discretion, and it is payable on resignation as much as on retirement.
Key points
- • Five years of continuous service, waived on death or disablement
- • 15 days’ pay for each completed year
- • Divisor 26 inside the Act, 30 outside it
- • ₹20 lakh lifetime ceiling across all employers
- • Payable within 30 days of becoming due, with interest after that
Frequently Asked Questions
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