Gratuity Calculator

Which formula does this tool use?

For the “covered under the Act” option it uses 15 × last monthly salary × years of service ÷ 26. For the other option it uses the same product ÷ 30. The salary is Basic + DA that you type in, and the service length is the whole number of years the tool counts after rounding.

How are extra months turned into years?

If the additional months are 6 or more, the service is rounded up to the next whole year, so 10 years 6 months counts as 11 years. With 5 months or fewer the months are ignored and only the full years are counted, so 10 years 5 months counts as 10. There is no pro-rating of partial years.

Why does the tool say a minimum of 5 years is required?

The tool compares the years field with 5 before looking at months, so 4 years 8 months returns the message and no amount. It does not model exceptions such as death or disablement, or any shorter qualifying period; those cases need to be checked with your employer or a legal adviser.

What is the ₹20,00,000 figure in the results?

It is the tax-exempt limit built into this tool. The “tax-exempt portion” is the smaller of the gratuity and ₹20,00,000, and anything above that is shown as the taxable portion. The tool does not cap the gratuity amount itself, does not apply separate exemption tests for employees outside the Act, and does not apply any special treatment for government employees.

What is the difference between the two employee categories?

Only the divisor changes. For a monthly salary of ₹80,000 and 12 years counted, the Act option shows ₹5,53,846, while the other option shows ₹4,80,000. The tool does not check whether your establishment is actually covered; that depends on the facts of your employer and the law in force.

What happens with zero or cleared inputs?

A salary of zero, which is also what a cleared box becomes, returns ₹0. A negative salary is treated the same way. Years below 5 return the minimum-service message instead of an amount.

What does the tool not include?

It does not calculate leave encashment, provident fund, notice pay, forfeiture, interest on delayed payment, tax at your slab rate on the taxable portion or any change in the statutory ceiling. Rules and limits for gratuity and its taxation change from time to time and the tool is not updated automatically, so rely on your employer, the Income Tax Department or a chartered accountant for the actual position.