ToolFoxGratuity Calculator
Calculate the gratuity payable on retirement or resignation under India's Payment of Gratuity Act, with the statutory cap applied.
- Gratuity payable
- ₹2,88,462
- Statutory cap applied?
- No
How it works
Under India's Payment of Gratuity Act, gratuity for an employee covered under the Act is Gratuity = 15 × last drawn monthly salary (basic + DA) × years of service ÷ 26 — 26 being the standard working days in a month used for this calculation. The amount is capped at ₹20,00,000 regardless of what the formula gives; anything above that is at the employer's discretion, not a statutory entitlement. Service of more than 6 months in the final year rounds up to a full year.
Example
At ₹50,000 last drawn salary and 10 years of service, gratuity works out to ₹2,88,461.54. At ₹2,00,000 salary and 40 years of service, the raw formula gives over ₹1.23 crore, but the statutory cap limits the actual payable amount to ₹20,00,000.
Frequently asked questions
What counts as "last drawn salary" here?
Basic pay plus Dearness Allowance (DA) only — other allowances like HRA or bonuses are excluded from the gratuity formula.
What happens if I worked 10 years and 7 months?
Under the Act, any period of service beyond 6 months in the final year is rounded up to the next full year; 6 months or less is dropped. Enter the rounded figure as "years of service".
Does the ₹20,00,000 cap apply to everyone?
It applies to the tax-exempt statutory gratuity under the Act for covered establishments; an employer can pay more voluntarily, but amounts above the cap may be taxed differently.
Is gratuity taxable?
Gratuity received under the Act is exempt up to the statutory limit; amounts beyond that, or gratuity from an employer not covered by the Act, may be taxed — check current Income Tax rules for your case.
Related tools
Convert your yearly CTC into monthly and yearly take-home pay after PF, professional tax and income tax.
Income Tax CalculatorEstimate income tax under the new regime, with standard deduction, Section 87A rebate and cess.
SIP CalculatorEstimate the future value of a monthly SIP in mutual funds, with invested amount and gains.