Gratuity Calculator India
Calculate your exact legal gratuity entitlement, 5-year eligibility criteria, and income tax exemption limits under Section 10(10). 100% free with zero signup.
Tenure & Pay
Total Gratuity Entitlement
₹1,73,077
Formula: (15 × ₹50,000 × 6) ÷ 26
Tax Exemption (Section 10(10))
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Statutory Assumptions: How Gratuity is Calculated in India
Under the Payment of Gratuity Act, 1972, gratuity is a statutory retirement benefit payable to employees upon cessation of employment after rendering continuous service. This calculator applies the standard statutory parameters:
- 26 Working Days Factor: A statutory month is defined as 26 working days (excluding 4 weekly rest days) as established in landmark Supreme Court precedents (e.g., Digvijay Woollen Mills v. Mahendra Prataprai Buch).
- 15 Days Wages: Gratuity is calculated at the rate of 15 days' last drawn basic wages + Dearness Allowance (DA) for every completed year of service:
(15 × Basic × Years) ÷ 26. - 5-Year Continuous Service: Section 4(1) mandates 5 years of continuous service as an eligibility condition, waived solely in cases of death or permanent total disablement due to accident/disease.
- Service Tenure Rounding: Service exceeding 6 months in the final year of employment is rounded up to the nearest integer year (e.g. 5 years 7 months = 6 years).
- Tax Exemption Limit (₹20,00,000): Under Section 10(10) of the Income Tax Act, 1961, cumulative lifetime gratuity exemption for private sector employees covered under the Act is capped at ₹20 Lakhs. Any excess payout is subject to marginal income tax rates.
This gratuity calculator is an informational and illustrative simulation model. It does not constitute a formal legal or statutory determination. Actual gratuity entitlement and disbursement may vary based on:
- Whether your organization is covered under the Payment of Gratuity Act, 1972 (establishments with 10+ employees) or governed by the non-Act 30-day formula:
(15 × Half-Month Pay × Tenure) ÷ 30. - Company gratuity trust rules offering more favorable terms than the statutory minimum.
- Judicial disputes regarding interrupted continuous service, unpaid leave periods, or seasonal employment.
- Statutory forfeiture clauses under Section 4(6) for termination arising from damage or riotous conduct.
For formal exit clearance, enterprise settlement statements, or labor law compliance, please consult with your company's labor law counsel or certified HR compliance advisor.