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Gratuity calculator — 15/26 formula and Rs 20 lakh cap

Enter your last monthly basic and DA and your years of service to get gratuity under the Payment of Gratuity Act — including the part-year rounding and the Rs 20 lakh ceiling.

Last verified 29 October 2026 Sources 3 No sign-up, no storage Formula and sources shown

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The method

How it is calculated

The formula this page actually runs

The gratuity formula is a wage rate multiplied by counted years. Two details — how a part-year is rounded and which wages count — change the answer more than people expect.

Formula

Gratuity = (basic + DA) × 15 ÷ 26 × completed years · part-year over 6 months counts as a full year · capped at Rs 20,00,000

Find monthly wages

Add last drawn basic pay and DA. For the Act, wages are basic + DA, not the full gross salary or CTC. Allowances like HRA and transport are excluded.

Count the years

Count completed years of continuous service. If the leftover part-year is more than six months, it is rounded up to a full year; six months or less is ignored. This is where 10.5 and 10.6 years give different results.

Apply 15/26, then the cap

Multiply wages by 15/26 for each counted year. The result is capped at Rs 20,00,000. Employees covered by the Act use this formula; companies outside it often use 15/30, shown as the second option.

The numbers

Gratuity rules at a glance

Reference values, not hidden defaults

Item	Rule	Why it matters
Eligibility	5 years of continuous service	Waived on death or disablement
Gratuity formula	(basic + DA) × 15/26 × years	For employees covered by the Act
Wages	Last drawn basic + DA	HRA and other allowances are excluded
Days basis	15 days per year out of 26 working days	Not a half-month out of 30
Part-year	More than 6 months counts as one year	Six months or less is dropped
Statutory ceiling	Rs 20,00,000	Amounts above the ceiling are not gratuity
Tax exemption	Section 19, Income-tax Act 2025 (Sl. Nos. 3–6)	Subject to the statutory conditions
Government employees	Different formula; retirement gratuity capped at Rs 20 lakh	1/4 month basic + DA per 6-month period

Payment of Gratuity Act, 1972 and the deduction under section 19 (Table, Sl. Nos. 3–6) of the Income-tax Act, 2025. Check your employer's scheme and service records for the final figure.

Before you use it

What most pages get wrong

4 things worth knowing before you use the number

01 · 15/26, not 15/30

The divisor is 26 working days

The Act uses 15 days' wages out of a 26-working-day month. Using 30 days understates the gratuity by about 13%.

02 · The rounding rule

10.6 years can beat 10.5 years

A part-year longer than six months is rounded up to a full year, so 10 years and 7 months counts as 11 years. Exactly six months does not.

03 · The ceiling

Rs 20 lakh is the statutory maximum

Gratuity above Rs 20,00,000 is outside the Act's formula and is generally taxable; section 19 of the Income-tax Act, 2025 (Table, Sl. Nos. 5 and 6) sets the deduction limit.

04 · Five years

No gratuity before five years, with exceptions

Continuous service of five years is required. Death or disablement ends that requirement, and the nominee receives the benefit.

Questions

Frequently asked questions

The queries people actually search

How is gratuity calculated for 10 years of service?+

For 10 years with monthly basic plus DA of Rs 40,000, gratuity is 40,000 × 15/26 × 10 = about Rs 2,30,769. The calculator applies the same formula to your wages and counted years.

Why is the formula 15/26?+

The Payment of Gratuity Act uses 15 days' wages for every completed year, where a month is taken as 26 working days. So the annual amount is 15/26 of monthly wages, not half of it.

Is DA included in gratuity wages?+

Yes, DA counts as wages under the Act, along with basic pay. HRA, transport allowance and most other allowances are excluded. Enter the DA that appears in your last pay slip.

Is gratuity taxable?+

From tax year 2026–27 the deduction is under section 19 of the Income-tax Act, 2025: for employees covered by the Payment of Gratuity Act it is limited to the amount worked out under that Act, and other employees get the least of the gratuity, half a month's average salary per completed year and the notified limit, currently Rs 20 lakh. Government employees' gratuity is fully deductible, and gratuity paid to a widow, children or dependants on an employee's death is exempt under Schedule III (Sl. No. 38).

How is a part-year counted?+

If the period beyond complete years is more than six months, it counts as a full year. So 10 years 7 months counts as 11 years, while 10 years 5 months counts as 10. The calculator applies this automatically.

Does this work for government employees?+

The formula here is the private-sector Payment of Gratuity Act formula. Central government retirement gratuity uses 1/4 of basic plus DA for each six-month period, capped at 16.5 months' emoluments and Rs 20 lakh; the pension calculator shows that estimate.

Can my employer pay more than the Act requires?+

Yes. Many companies have more generous schemes or pay a higher ceiling. The statutory minimum is what this calculator estimates; check your appointment letter for the employer's scheme.

Trust layer — how to check this page

Sources, dates and a changelog.

Every number this calculator uses is either an input you control or a value from the sources below. The formula is compiled and tested at build time, so the page cannot ship with a broken calculation.

Sources

This page

Last verified: 29 October 2026
Next review: 29 April 2027
Vertical: Salary & Tax
Build tests: 7 passed
Changelog: 4 entries

How we handle errors

Spotted a mistake? Report it — we correct and log it.
Corrections appear in the changelog below.
Read the methodology and the disclaimer.

Changelog

2026-10-30Gratuity limit worded as the notified limit, currently Rs 20 lakh (Notification 16/2019, saved by section 536(2)(j)); added the Schedule III Sl. No. 38 exemption for gratuity paid to a widow, children or dependants.

2026-10-30Tax references moved from section 10(10) of the 1961 Act to section 19 (Table, Sl. Nos. 3–6) of the Income-tax Act, 2025.

2026-10-29Fixed: gratuity now returns zero below five counted years of continuous service, in both the covered and non-covered branches.

2026-10-29First published with the 15/26 formula, part-year rounding and Rs 20 lakh cap.