Private-sector employees covered under the Payment of Gratuity Act use the formula: (Last drawn salary x 15/26) x years of service. Maximum tax-free gratuity is ₹20 lakh (raised from ₹10L in 2018). Eligibility kicks in after 5 years of continuous service - with a special exception for 4 years 240 days that the calculator accounts for.
When to use this
Use when: leaving a private-sector job after 5+ years, retirement from a private firm, computing severance / final settlement, comparing job offers (gratuity is a real component of total compensation), planning when to leave to maximize tax-free gratuity.
Frequently Asked Questions
Why 15/26 in the formula?
15 days = the gratuity-earning days per year of service. 26 = working days per month (excluding 4 Sundays). So the per-year gratuity = ~half a month's salary. For 10 years = 5 months' salary. Companies not covered by the Act use 15/30 (lower number) - the calculator picks the right formula based on the toggle.
What if I leave at 4 years and 10 months?
You hit the 4-year-240-day Madras HC exception. If you've completed 240+ working days in the 5th year, you qualify for gratuity even though you didn't complete 5 full years. The calculator flags this when applicable.
Powered by Gratuity Calculator.