Gratuity Calculator (Payment of Gratuity Act 1972)
Institutional statutory gratuity calculation based on the official 15/26 labor code formula, 5-year vesting, and ₹20 Lakh tax exemption ceiling.
Service & Salary Inputs
Statutory Gratuity Amount
₹₹3,00,000.00
100% Tax-Free under Section 10(10) (Below ₹20 Lakhs ceiling)
Statutory Gratuity Formula (Covered Establishment)
All calculations on InvestResearch India execute with 28-digit precision arithmetic via decimal.js, eliminating floating-point drift and adhering to statutory regulatory conventions.
Example: Employee leaving after 12 Years and 8 Months of Service with ₹80,000 Last Drawn Basic
Last Drawn Basic + DA: ₹80,000 | Tenure: 12 Years 8 Months (Rounds to 13 Years) | Status: Covered under Act
1. Service Tenure rounded up = 13 Years (since 8 months > 6 months) 2. One day wage = ₹80,000 / 26 = ₹3,076.92 3. 15 days wage = 15 × ₹3,076.92 = ₹46,153.85 4. Total Gratuity = 13 × ₹46,153.85 = ₹6,00,000 5. Tax Exemption: 100% Tax-Free under Section 10(10) (well below ₹20,00,000 statutory exemption ceiling)
Statutory Tax Framework (Union Budget FY 2026–27)
Under Section 10(10) of the Income Tax Act, gratuity received by private sector employees covered under the Act is exempt up to the statutory limit of ₹20,00,000. Gratuity received by government employees is 100% exempt without any upper ceiling.
Frequently Asked Questions
What is the minimum service requirement to become eligible for gratuity?
Under the Payment of Gratuity Act 1972, an employee must complete a minimum of 5 continuous years of service with the organization. Exception: In case of death or permanent disability of an employee, the 5-year condition is waived entirely.
How are fraction of years treated in gratuity calculations?
If an employee has served more than 6 months in their final year (e.g., 7 years and 7 months), it is rounded up to the next full year (8 years). If less than 6 months (e.g., 7 years and 4 months), it is rounded down to 7 years.