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Payment of Gratuity Act

Gratuity calculator

Last drawn basic + DA, years served, and the 15/26 rule — with the part-year rounding the Act actually applies.

Short answer: ₹50,000 last drawn basic + DA with 9 years 7 months of service gives ₹2,88,462 — the 7 months round up to a tenth year, and 50,000 × 15/26 × 10 is the whole calculation.

Why basic + DA and not the full salary

The Act names wages, which for most employers means basic plus dearness allowance — not HRA, not the special allowance, not the bonus. Using the CTC or the gross salary inflates the number, and payroll will pay the smaller one.

Five years, and the exceptions

Continuous service of five years is the normal condition. Death and disablement remove it, and some fixed-term contracts are treated differently. If you are close to the line, the exact wording of your appointment letter matters more than any calculator.

Gratuity questions

What is the gratuity formula?

For employers covered by the Payment of Gratuity Act: last drawn basic + DA × 15/26 × completed years of service. The 26 is the number of working days in a month and 15 the days paid per year. Employers outside the Act conventionally use 15/30.

How is a part year counted?

Service of more than six months in the final year counts as a full year under the Act, which is why 9 years and 7 months is calculated as 10 years here. Exactly six months does not round up.

When does gratuity become payable?

After five continuous years of service, on resignation, retirement or termination (with exceptions for death and disablement). The five-year condition is a fact about your employment, not something this calculator can check.

Is the whole amount tax-free?

For private-sector employees the exemption is capped at ₹20,00,000 over a lifetime; anything above that is taxable as salary. Government employees are treated differently. The page states the cap rather than silently clamping your figure.

Related tools

Income tax calculatorWhat the taxable part does to your tax.Salary slip generatorWhere basic + DA is stated.PPF calculatorAnother long-term maturity figure.