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Gratuity Calculator

Accurate statutory calculation under Payment of Gratuity Act 1972.

₹
Includes basic wages plus Dearness Allowance (DA). Excludes HRA and special allowances.
6 months or more rounds up to an additional completed year.
The 5-year continuous service rule is waived in case of death or permanent disablement.
Statutory Calculation
Sec 4(2) Act 1972
Estimated Gratuity Payable
₹1,73,077
Eligible for Statutory Gratuity (≥ 5 Years Service)
Basic + DA Considered ₹50,000
Tenure Counted 6 Years (Rounded up from 5y 7m)
Calculation Formula (15 × Basic × Years) / 26
Tax-Exempt Limit ₹20,00,000 (Govt Ceiling)
Taxable Gratuity Portion ₹0 (100% Tax-Free)

How the 15/26 Gratuity Formula Works in India

Under Section 4(2) of the Payment of Gratuity Act 1972, for every completed year of service or part thereof in excess of six months, the employer must pay gratuity at the rate of 15 days' wages based on the last drawn rate of wages for the employee concerned.

Gratuity = (15 × Last Drawn Basic + DA × Number of Years) / 26

Why is the divisor 26 instead of 30?

The Supreme Court of India in Digvijay Woollen Mills v. Mahendra Pratap Buch established that a month consists of 26 working days (excluding 4 Sundays). Hence, one day's wage is calculated by dividing monthly wages by 26, rather than 30.

The 5-Year Eligibility Rule & 240-Day Precedent

Generally, an employee must render continuous service of at least 5 years to qualify for gratuity. However, under Section 2A of the Act, if an employee in a non-seasonal establishment works for at least 240 days in the 5th year (or 190 days in underground mines/six-day week setups), they are deemed to have completed 5 continuous years and are eligible for gratuity.