Gratuity calculator
Gratuity under the Payment of Gratuity Act, 1972 — fifteen days’ wages for every year served, on last drawn basic plus DA, with the statutory ceiling applied.
Basic salary plus dearness allowance — not your full CTC. Gratuity is computed on this alone.
Six months or more counts as a full year in the formula.
Gratuity payable
₹2,88,462
- Years credited
- 10
- Formula
- basic × 15 × yrs ÷ 26
How the number is worked out
The Act sets the formula as last drawn basic + DA × 15 × years of service ÷ 26. The 26 is working days in a month, and the 15 is fifteen days’ wages for each year served.
Two rules trip people up. Eligibility counts completed years, so four years and eleven months earns nothing. But once you are past five years, a part year of six months or more rounds up — seven years and seven months is paid as eight.
The statutory entitlement is capped at ₹20,00,000. Above that, an employer may pay more voluntarily, but the Act does not require it. This calculator shows both figures when the cap applies, so the difference is visible.
This is an estimate for planning. Your actual settlement depends on your contract and your employer’s policy — confirm with them before relying on a figure.
Frequently asked questions
Last drawn basic salary plus dearness allowance, multiplied by 15, multiplied by the number of years of service, divided by 26. The 26 represents working days in a month, and the 15 represents fifteen days' wages for each year served.
Five completed years of continuous service. Eligibility counts completed years, so four years and eleven months does not qualify — even though, once you are eligible, a part year of six months or more counts as a full year in the formula.
On last drawn basic salary plus dearness allowance only, not on total CTC. That is why the amount is usually far smaller than people expect from their overall package.
Yes. The Payment of Gratuity Act caps the statutory entitlement at ₹20,00,000. An employer may pay more than that voluntarily, but they are not obliged to, and anything above the ceiling is a contractual matter rather than a statutory one.
Once you are past five completed years, any additional period of six months or more is rounded up to a full year. Seven years and seven months is credited as eight years; seven years and five months is credited as seven.
For employees covered by the Act, gratuity is exempt from income tax up to the statutory limit, with the exempt amount being the least of the statutory ceiling, the actual gratuity received, or the amount computed by the formula. Tax treatment depends on your circumstances, so confirm yours before relying on it.
Doing this for every leaver?
SignHR already holds what this calculation needs — last drawn basic, joining date and last working day — on the employee record, and runs the exit itself: resignation, clearance, and relieving letters. Settlement arithmetic ships with the payroll module; until then this calculator uses the same statutory formula.