Verified Calculation Methodology
Reviewed by CalculatorAll.online Financial Editorial Studio•Last Updated: August 8, 2026
How to use this Payment of Gratuity Act Guidelines calculator
Gratuity is a monetary benefit paid by employers to employees in recognition of long-term continuous service under the Payment of Gratuity Act, 1972.
Key Calculation Assumptions
- Calculations assume fixed compounding frequencies unless custom compounding is selected.
- Results do not factor in unannounced statutory tax rate adjustments or customized bank penalty fees.
- Calculations serve educational decision-making and planning purposes.
Frequently Asked Questions (FAQs)
What is the minimum service period required for gratuity?
An employee must complete at least 5 years of continuous service in an organization to qualify for gratuity.
What is the statutory gratuity formula?
Gratuity = (15 × Last Drawn Basic Salary & DA × Completed Years of Service) ÷ 26.
What is the maximum tax-exempt limit for gratuity?
Gratuity received by non-government employees is tax-exempt up to a lifetime ceiling of ₹20 Lakhs.
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Financial Disclaimer: Calculations produced by CalculatorAll.online are estimates for informational and educational purposes only. Market interest rates, tax laws, and bank terms vary. These figures do not constitute personalized investment, legal, tax, or credit advice. Always consult a certified financial advisor before finalizing financial decisions.