Gratuity Calculator
Illustrate a capped gratuity amount for a covered monthly-rated employee using the standard statutory formula.
Gratuity Payable
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How the gratuity calculator works
Enter last-drawn monthly basic + DA and eligible whole service years. The calculator applies (15 × salary × years) ÷ 26 only for its stated covered monthly-rated scope.
Good to know
- The model applies the ₹20 lakh statutory cap under the Act.
- It does not decide coverage or partial-year treatment.
- It does not assess death/disability, forfeiture, tax, or better contractual terms.
Methodology and statutory scope
- Method version
gratuity-act-covered-employees-v1- Class
- B / R3
- Jurisdiction
- IN
- Effective rule period
- 2018-03-29 onward
- Source status
- official sources verified 2026-08-25 by agent source verification at owner direction; constants unchanged; no qualified professional sign-off recorded
- Rounding
- Keep full precision through the formula; round displayed INR only.
- Review trigger
- Payment of Gratuity Act, cap, coverage, wage-definition, or methodology change
- Rule as of
- 2026-08-25
- Review due
- 2027-08-25
- Rule verification state
- verified
Formula: For a covered monthly-rated employee: gratuity = 15 × last-drawn monthly wages × eligible completed service years ÷ 26; statutory cap = ₹20 lakh.
Educational boundary: General education only; not an eligibility, legal, employment, tax or settlement determination.
Included: Covered monthly-rated employee; eligible whole service years; last-drawn basic wages plus DA
Excluded: coverage determination; partial-year service assessment; death/disability exception; forfeiture, contractual enhancement and tax treatment
Official sources checked:
Manifest primary source: Official Gazette notification S.O. 1420(E)
- Only for employees covered by the Payment of Gratuity Act and the standard monthly-rated formula.
- Enter eligible completed service years; the final part-year, death/disability exception, coverage, forfeiture, better contractual terms and tax treatment are not determined.
- This is an estimate, not an employer settlement calculation.
Frequently Asked Questions
Who can use this calculation?
It is scoped only to a covered, monthly-rated employee using the standard formula. It does not determine coverage, continuous service, a death/disability exception, or the terms of an individual employment contract.
How is gratuity calculated?
For employees covered by the Act: Gratuity = (15 × last drawn basic+DA × years of service) ÷ 26. The '15/26' represents 15 days' wages for each completed year, based on a 26-day working month.
How should I enter service length?
Enter eligible completed service years only. The calculator does not assess final part-year treatment, continuous-service rules, or exceptions; those require the applicable law and employment facts.
What does the ₹20 lakh amount mean here?
For the covered-case formula, the Labour Ministry’s notification sets a ₹20 lakh statutory cap under the Act. This calculator does not calculate tax treatment or any amount payable under better contractual terms.
Disclaimer: This calculator produces illustrative estimates only. Actual returns vary and, unless stated otherwise, results exclude expense ratios, exit loads, transaction costs, and taxes. Assumed rates are inputs, not forecasts or assured returns. This is educational content, not personalized investment advice — see our full disclaimer.