Gratuity is a lump-sum reward for long, continuous service. Under India's Payment of Gratuity Act, 1972, most employers pay 15 days of wages for every completed year — enter your last drawn salary and years of service for the payout and per-year accrual.
Why a 26-day month sets your daily wage
The Act pays roughly 15 days of wages for each completed year of service, where a month is treated as 26 working days. So your daily wage is the monthly salary divided by 26, and you receive about 15 of those days per year worked. On ₹50,000 that is ₹1,923 a day, not ₹1,667.
₹50,000 last drawn salary (Basic + DA), 10 years of service. Accrual per year: 50,000 × (15/26) = ₹28,846. Gratuity payable: 28,846 × 10 = ₹2,88,462.
What the page holds fixed:
- Uses the 15/26 formula from the Payment of Gratuity Act, 1972.
- Salary entered is the qualifying Basic + DA.
- Five or more years of continuous service assumed (eligibility threshold).
Gross pay in the salary box overstates every rupee
Use your last drawn monthly salary, generally basic pay plus dearness allowance rather than gross pay including all allowances. Because gratuity is based on this figure, entering the wrong salary component is a common source of error — and a linear one: a salary 40% too high returns a payout 40% too high.
Four years and eleven months usually pays ₹0
Eligibility is a cliff, not a slope: typically after five years of continuous service with the same employer, though events such as death or disability can waive that minimum. The exact eligibility rules depend on your jurisdiction and employer. One month short pays nothing at all, not less — ₹1,44,231 forgone at ₹50,000.
Seven years and seven months counts as eight
Rules differ. Under some schemes a part-year beyond six months is rounded up to a full year, while others count only completed years. This calculator multiplies by the whole number of years you enter, so adjust the input if your local rule rounds differently. Two months can move the payout by ₹28,846.
Where a ₹2,00,000 salary meets the ₹20 lakh ceiling
This calculator does not apply the statutory cap. Many systems cap the maximum gratuity payable and may exempt only up to a limit for tax. This tool shows the raw formula result, so a very long tenure or high salary could produce a figure above the cap that actually applies to you. The crossover is ₹20,00,000 ÷ yearly accrual: 69 years at ₹50,000 a month, 17.3 at ₹2,00,000.
The limitations worth noting:
- The ₹20 lakh statutory maximum is not applied — a very high salary or long tenure can exceed it.
- Under the Act a part-year over six months rounds up to a full year; this tool uses whole years as entered.
The exemption cap decides what you keep
Many jurisdictions exempt gratuity up to a cap and tax any excess. The exemption amount and cap vary by country and by the type of employer, so check your local tax rules before assuming the full amount is tax-free. This page shows gross, not net.
Gratuity is not the same everywhere, either. The 15/26 approach is common, but the qualifying period, the salary definition, caps, rounding, and tax treatment all vary by country and employer. Treat the result as a general estimate and confirm the rules that apply to your employment.
Sources and methodology
The 15/26 formula, the five-year eligibility threshold, and the statutory maximum come directly from the Act.