Gratuity Calculator

Gratuity for many Indian employees covered by the Payment of Gratuity Act is commonly estimated as last drawn salary × 15/26 × completed years of service. Last drawn salary here means basic plus dearness allowance. The default ₹50,000 for 8 years produces about ₹2,30,769. Caps, forfeiture and tax exemptions are not fully modelled.

The cash-flow question

Someone leaving an eight-year job in Noida or a factory in Coimbatore needs a rehearsal number before HR shares the worksheet. The 15/26 factor is the statutory day-count (15 days’ wages for each year, a month taken as 26 days). IndiaKit uses that identity so you can see scale; the Act, the establishment’s coverage, and any better company scheme still govern the payout.

The maths on this page

Amount = (basic + DA) × 15 / 26 × years. Defaults: ₹50,000 × 15/26 × 8 ≈ ₹2,30,769. Rounding of years (more than six months often counts as a year in the Act’s practice) is not auto-applied; enter completed years as your HR would.

Establishments below coverage thresholds, government servants under other rules, and employees with a more generous award or settlement will not match this. Tax exemption on gratuity has statutory ceilings that change; confirm on incometax.gov.in.

This is not a resignation-letter generator and not a legal opinion on eligibility after five years of continuous service.

Eight years at ₹50,000 basic+DA in Noida

Vikram’s last drawn basic plus DA is ₹50,000 after eight completed years in Noida. The Act-style estimate is about ₹2.31 lakh. He still asks HR whether the company scheme is more generous and whether the statutory tax-exempt cap will cover the whole amount.

What a bank still has to confirm

Indicative Payment of Gratuity Act arithmetic. Coverage, forfeiture for misconduct, and income-tax exemption limits must be read from the Act and the Income-tax Act as in force. Not a claim form.

Common questions

Why divide by 26 rather than 30?

The Act’s formula uses 15 days’ wages per year with a month treated as 26 working days. Using 30 would understate the statutory estimate.

Do I get gratuity before five years?

The Act generally requires five years of continuous service, with some exceptions (for example, death or disablement in specified cases). This calculator will still multiply whatever years you type; eligibility is a legal question.

Is the result tax-free?

A portion of gratuity is often exempt up to a notified ceiling for covered employees. Excess can be taxable. Check the current exemption on incometax.gov.in.