About the Gratuity Calculator

Gratuity is a lump-sum payment an employer makes to an employee who leaves after at least 5 years of continuous service, governed in India by the Payment of Gratuity Act, 1972. The formula pays 15 days of last-drawn salary per completed year of service: (15 × salary × years) ÷ 26, where 26 accounts for working days in a month. Employees not covered by the Act receive the same 15-day benefit but divided by 30.

Rounding and taxes

Service is rounded to the nearest full year — 6 months and above counts as an extra year, so 4 years 7 months qualifies at 5 years. For tax, private-sector gratuity is exempt up to ₹20 lakh (the higher of the formula amount or the statutory ceiling); government employees are fully exempt. The taxable remainder is added to your income in the year of receipt, so planning around the exemption cap can materially affect your payout.