ToolPetal
Gratuity Calculator FY 2026-27
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Establishment
| Step | Value |
|---|
Formula branch
(basic+DA) × 15/26 × years(basic+DA) × 15/30 × yearsEligibility snapshot
Gratuity for many private-sector employees follows the Payment of Gratuity Act, 1972 when the establishment is covered. Typical planning questions this page does not auto-answer: five-year continuous service (with statutory exceptions), forfeiture, and whether your employer is Act-covered. Confirm coverage with HR before trusting either formula branch. Government gratuity is often fully exempt: this tool does not special-case every employer type. Not tax or employment-law advice. See the Disclaimer.
Formula branches: covered vs non-covered
- Covered (15/26):
(basic + DA) × 15 / 26 × years. A partial year of six months or more rounds up (16.5 → 17). - Non-covered (15/30):
(basic + DA) × 15 / 30 × completed years. Whole completed years only (16.5 → 16); no 6-month round-up.
Tax exemption under section 10(10) is illustrated as the least of actual gratuity, the formula amount, and an editable lifetime ceiling (default Rs 20 lakh). Edit the cap when a newer notification applies. For salary structuring context see CTC to in-hand.
Years-of-service worked example
Defaults: last drawn basic+DA Rs 80,000 / month, service 16.5 years, cap Rs 20,00,000.
| Branch | Years used | Formula amount |
|---|---|---|
| Covered (15/26) | 17 (6+ months up) | ≈ Rs 7,84,615.38 |
| Non-covered (15/30) | 16 completed | Rs 6,40,000.00 |
Under the default 20 lakh ceiling, exemption tracks the formula amount when it is below the cap; taxable excess = max(0, amount − exempt). Flip the radio and re-run before matching an HR worksheet.
FAQ
How is gratuity calculated for a covered establishment?
Under the Payment of Gratuity Act, 1972, gratuity is last drawn salary (basic + DA) times 15/26 times completed years of service. A year with six months or more is rounded up. This gratuity calculator uses that 15/26 formula when Covered is selected.
What if my employer is not covered by the Gratuity Act?
Non-covered establishments commonly use last drawn salary times 15/30 times completed years (half a month per year, 30-day month). Only whole completed years are counted. Switch the toggle to compare.
What is the tax exemption cap on gratuity?
For most non-government employees, exemption under section 10(10) is the least of actual gratuity, the statutory formula, and a lifetime ceiling. That ceiling has long been 20 lakh rupees; it is an editable default here because notifications can change. Government employees are typically fully exempt. This is not tax advice.
Are my salary details uploaded?
No. Last drawn pay, years of service, and the formula run in your browser. Nothing is sent to ToolPetal.