Includes 2-page detailed calculation analysis, algorithm definition, formula breakdown, and milestone schedule.
Breakdown of your total gratuity
Total Gratuity
₹4,15,385
for 12 years of service
Transparency into how your Gratuity Calculator numbers are derived, step-by-step mathematical formulation, and key milestone projections.
Applies Section 4(2) of the Payment of Gratuity Act, 1972. Divides the monthly basic wage by 26 working days (excluding 4 Sundays) to compute a single working day's pay, multiplying by 15 days for each completed year of continuous service, capped at statutory exemption limits under Section 10(10).
Total Gratuity
₹4,15,385
Statutory entitlement
Tax-Exempt Portion
₹4,15,385
Under Income Tax Sec 10(10)
Taxable Portion
₹0 (Fully Exempt)
Completely tax-free
Equivalent Months
6.9 Months
Of monthly basic salary
Gratuity = (15 × Last Drawn Basic × Tenure) / 26Under Indian labor law, gratuity is computed based on 15 days of wages for every completed year of service, using 26 working days in a month.
| Service Duration | Basic Salary | Total Gratuity | Tax-Free Amount | Taxable Amount |
|---|---|---|---|---|
| 5 Years | ₹60,000 | ₹1,73,077 | ₹1,73,077 | Nil (Tax-Free) |
| 10 Years | ₹60,000 | ₹3,46,154 | ₹3,46,154 | Nil (Tax-Free) |
| 12 Years | ₹60,000 | ₹4,15,385 | ₹4,15,385 | Nil (Tax-Free) |
Eligibility: An employee is entitled to gratuity after completing 5 continuous years of service in an establishment with 10+ employees.
Tax Exemption: Up to ₹20 Lakhs of gratuity is completely tax-exempt under Section 10(10) of the Indian Income Tax Act.
Rounding Rule: If the employee worked for 6 months or more in the final year (e.g. 12 years 7 months), it is rounded up to the next full year (13 years).
Gratuity is a monetary retirement benefit paid by an employer to an employee in recognition of their long-term service. It is governed by the Payment of Gratuity Act, 1972.
Mandatory 5 years of continuous service is required, except in the case of death or disablement.
Based strictly on the last drawn Basic Salary + Dearness Allowance, excluding variable allowances.
Government employees receive fully tax-free gratuity; private employees enjoy exemption up to ₹20 Lakhs.
Gratuity is a lump sum an employer pays for continuous service. This gratuity calculator applies the formula set out in the Payment of Gratuity Act, using your last drawn basic salary plus dearness allowance and your years of service.
These calculators are for illustration only. Returns shown are estimates based on the inputs you provide and are not a guarantee of future performance. Mutual fund investments are subject to market risks; read all scheme related documents carefully.