Why does the formula divide by 26 and not 30?

26 represents the number of working days in a month after removing four Sundays. The Payment of Gratuity Act 1972 specifically uses 26 as the divisor. Companies not covered by the Act sometimes use 30, which gives a smaller gratuity amount.

Can I get gratuity if I resign before 5 years?

No, except in cases of death or permanent disability. The 5-year minimum is mandatory under the Act. However, some court rulings count 4 years and 240 working days as 5 years. Check with a labour lawyer if you are close to the 5-year mark.

Is gratuity paid on basic salary or gross salary?

Gratuity is calculated on basic salary plus dearness allowance (DA) only. It does not include HRA, bonus, overtime, or other allowances. This is why companies sometimes keep basic salary low to reduce gratuity liability.

When must the employer pay gratuity?

Within 30 days of the employee leaving or retiring. If the employer disputes the amount, they must pay the undisputed portion within 30 days and the rest within 30 days of resolution. Delayed payment attracts interest.

Gratuity Calculator India | Payment of Gratuity Act Formula

This free gratuity calculator India gives you instant results with no signup required. All calculations run in your browser — nothing is sent to any server.

Gratuity Calculator India 2026

Calculate gratuity under Payment of Gratuity Act 1972. Enter basic salary, years of service and months to get exact gratuity amount with tax-free limit.

Gratuity Formula India

Gratuity = (Last basic + DA / 26) x 15 x years of service. The number 26 represents working days in a month. Companies not under the Act use 30 instead of 26, giving a smaller amount.

Gratuity 5 Year Rule

You need 5 years of continuous service to claim gratuity. Exception: 4 years and 240 working days also qualifies per Madras High Court ruling. Death or permanent disability removes the 5-year requirement entirely.

Gratuity Tax Exemption 2026

Gratuity up to Rs 20 lakh is completely tax free for private sector employees. Government employees get unlimited tax-free gratuity. Amount above Rs 20 lakh is taxed as income in the year of receipt.

How to Claim Gratuity

Submit Form I in writing to your employer within 30 days of leaving. Employer must pay within 30 days. Delay attracts 8-10% annual interest. File complaint with Labour Commissioner if employer refuses.

Frequently Asked Questions

How is gratuity calculated in India?

Gratuity = (Last drawn basic salary + DA / 26) x 15 x completed years of service. For 10 years and 7 months, it counts as 11 years. For 10 years and 4 months, it counts as 10 years. Use the gratuity calculator above for instant results.

What is the maximum gratuity that is tax free?

Rs 20 lakh gratuity is tax free for private sector employees under the Payment of Gratuity Act 1972. Government employees receive fully tax-free gratuity with no upper limit. The Rs 20 lakh limit applies to total lifetime gratuity.

Can I get gratuity before 5 years?

No, except in cases of death or permanent disability where gratuity is paid regardless of service period. The Madras High Court ruling that 4 years and 240 working days counts as 5 years is accepted in many cases but not universally.

Why does gratuity formula use 26 and not 30?

26 represents the number of working days in a month after removing four Sundays. The Payment of Gratuity Act specifically mandates the divisor of 26. Companies not covered by the Act sometimes use 30, resulting in a lower gratuity amount.

What happens if employer does not pay gratuity?

If your employer refuses to pay gratuity, file a written claim with the Controlling Authority (usually Labour Commissioner) in your district within 30 days. Delayed payment attracts 8-10% annual interest. You can also approach Labour Court.

Gratuity Calculator India