Formula: Payment of Gratuity Act, 1972
Gratuity = (Last Salary × 15 / 26) × Years of Service
15 = days entitlement per year | 26 = working days per month (Act prescribed)
Ministry of Labour & Employment (Govt of India)Gratuity Calculator
For private sector employees covered under Payment of Gratuity Act, 1972 (organisations with 10+ employees). Minimum 5 years of service required for gratuity eligibility.
₹5K₹50,000/mo₹5L
5 yrs10 years40 yrs
Formula Applied:
(₹50,000 × 15 ÷ 26) × 10
= ₹28,846 × 10
Gratuity Amount
₹2,88,462
Last Salary (Basic+DA)₹50,000/mo
Years of Service10 years
Formula (15/26)0.5769
Gratuity Eligibility & Tax
Minimum service:5 continuous years
Maximum gratuity:₹20 lakhs (statutory ceiling)
Tax exemption:Least of: actual gratuity / ₹20L / (15/26 × last salary × years)
Paid by:Employer (not from EPF)
Applicability:Organisations with 10+ employees
Disclaimer: Formula based on Payment of Gratuity Act, 1972 (15/26 × last salary × years). For service periods with partial years: each completed half-year counts as a full year. Seasonal employees and certain categories have different rules. Verify eligibility and exact amount with your employer/HR.