Gratuity Calculator
Compute statutory gratuity under Payment of Gratuity Act 1972 (15/26 formula) with Sec 10(10) ₹20 Lakh tax exemption.
Gratuity Calculator
As per Payment of Gratuity Act 1972 with ₹20 Lakh exemption under Section 10(10)
Note: Special allowances and bonuses are excluded from gratuity calculation.
Minimum 5 years continuous service required for vesting.
₹2,62,500
Effective Tenure Considered: 7 Years
Tax-Exempt (Sec 10(10))
₹2,62,500
100% Tax-Free up to ₹20 Lakhs
Taxable Amount
₹0
Zero tax liability
Vesting Status
Eligible (> 5 Yrs)
Full statutory claim valid
Statutory Formula Applied:
* 26 represents working days in a month (excluding 4 Sundays), giving higher benefit to covered employees.
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Suggested Questions for this Tool:
Understanding Gratuity Calculator
Gratuity is a statutory lump-sum monetary benefit paid by an employer to an employee as a token of gratitude for continuous service upon retirement, resignation, superannuation, death, or disablement.
Under the Payment of Gratuity Act, 1972, organizations with 10 or more employees are statutorily mandated to pay gratuity using the standard 15/26 formula based on last drawn basic pay and total years of service.
* For employees not covered under the Gratuity Act, the formula uses (15 × Salary × Years) ÷ 30.
Key Regulatory Rules & Thresholds (FY 2025–27)
Essential departmental provisions, tax brackets, and statutory compliance mandates.
Minimum 5 Years Continuous Service
5-Year RuleGratuity is mandatory only after completing 5 continuous years with the same employer (waived in case of death or permanent disability).
4 Years 240 Days Judicial Rule
Judicial PrecedentVarious High Courts and the Madras HC have ruled that completing 4 years and 240 days in the 5th year fulfills the 5-year continuous service test.
Section 10(10) ₹20 Lakh Exemption
Tax ExemptionGratuity received by non-government employees is 100% tax-free up to a lifetime statutory ceiling of ₹20,00,000.
Mandatory 30-Day Payment Timeline
Statutory InterestEmployers must pay gratuity within 30 days of the employee's exit; delays attract 10% per annum compound interest.
Frequently Asked Questions
Authoritative answers to common questions verified by our accredited legal & compliance panel.
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