Gratuity Calculator (Payment of Gratuity Act, 1972)

Under Section 4 of the Payment of Gratuity Act, 1972, gratuity for covered employees is commonly computed as:

Gratuity = (15 × Last drawn monthly gratuity wages × Years of service) / 26

"Years of service" is rounded under the Act for this formula: a period of service in excess of 6 months in the final year is treated as one additional full year, while a period of 6 months or less is ignored. The divisor 26 represents the number of working days in a month used by the Act.

• This calculator applies only the Payment of Gratuity Act, 1972 framework: the general five-year threshold, subject to death or disablement exceptions.
• The ₹20,00,000 ceiling is the reviewed assumption used by this calculator. Confirm it against the sources below for the relevant cessation and tax dates.
• Employers may pay a higher gratuity than the statutory formula, but the tax exemption is capped at the statutory ceiling.

Sources

• Payment of Gratuity Act, 1972 — Section 4 (computation of gratuity).
• Payment of Gratuity (Amendment) Act — statutory ceiling notifications.
• Income Tax Act, 1961 — Section 10(10), exemption of gratuity up to the notified ceiling.

Verify the statutory ceiling, coverage, and rounding rule with a qualified advocate before relying on this estimate; the statutory cap is revised periodically by government notification.