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Gratuity calculator
Two rules do all the work here, and both catch people out: service beyond six months in the final year rounds up, and the divisor is 26 working days rather than 30. Get either wrong and the number is out by a fifth.
Service and salary
Basic and dearness allowance only — not gross salary, and not allowances.
Covered employers divide by 26 working days. Uncovered ones divide by 30, which produces a smaller number for the same salary.
Gratuity payable
₹3,46,154
Fully exempt from tax.
Running a full and final settlement?
Taxlabs produces the settlement statement, relieving letter and experience certificate together — with gratuity, leave encashment and the TDS on both already worked out.
Frequently asked
What is the gratuity formula?
Last drawn basic plus dearness allowance × 15 ÷ 26 × completed years of service, for an employer covered by the Payment of Gratuity Act. Employers not covered by the Act use a divisor of 30 instead of 26.
Why is the divisor 26 and not 30?
The Act treats a month as 26 working days, excluding Sundays. Using 30 understates gratuity by roughly 15% for the same salary — the single most common error in a full-and-final settlement.
Does 4 years and 7 months count as 5 years?
Yes, for a covered employer. Service beyond six months in the final year rounds up to a full year, so 4 years 7 months counts as 5 and the entitlement is triggered. Four years and five months does not.
Is gratuity taxable?
Gratuity received under the Act is exempt up to ₹20 lakh over a lifetime. Anything beyond that ceiling is taxable as salary income.
Do I get gratuity if I resign before five years?
No, except where employment ends because of death or disablement, in which case the five-year requirement does not apply.
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Coming soonBased on the Payment of Gratuity Act, 1972 and the ₹20 lakh statutory ceiling in force at the date of publication. State amendments and more favourable contractual terms are not applied. Nothing you type is sent to us or stored.