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₹20 Lakh Tax Free Exemption

Gratuity Calculator (Payment of Gratuity Act, 1972)

Calculate Statutory Gratuity Payout & ₹20 Lakh Tax Exemption on Resignation or Retirement

All Calculators (11) How It Works Formula FAQs

Gratuity Calculator (Payment of Gratuity Act, 1972)

Estimate your statutory gratuity payout upon resignation or retirement, tax exemption limits, and taxable amounts.

₹20 Lakh Exemption
₹
Years
Estimated Gratuity Payable
₹ 3,46,154
Calculation Formula (15 × Basic × Years) / 26
Tax-Free Exemption Limit ₹ 20,00,000 (100% Tax Free)
Taxable Gratuity ₹ 0
Consult Tax Specialist
In-Depth Overview

About the Gratuity Calculator (Payment of Gratuity Act, 1972)

Calculate your statutory gratuity payout upon resignation, retirement, or change of employment under the Payment of Gratuity Act, 1972. Compute gratuity entitlements using the official 15/26 days formula and verify tax exemption up to ₹20 Lakhs.

Key Capabilities & Features

  • Compliant with Payment of Gratuity Act, 1972 statutory 15/26 days formula
  • Incorporates ₹20,00,000 maximum tax-free exemption limit under Section 10(10)
  • Automatic rounding of service periods exceeding 6 months
  • Helps employees verify Full & Final (F&F) settlement amounts from employers
  • Assists in reporting gratuity receipts correctly in annual ITR filing
Step-by-Step Guide

How Does the Gratuity Calculator Work?

Follow these simple steps to obtain instant, legally validated mathematical and tax calculations.

1

1. Enter Last Drawn Monthly Basic + DA

Input your monthly basic salary plus dearness allowance from your last drawn payslip.

2

2. Enter Completed Years of Service

Input your total continuous service tenure in years (minimum 5 years mandatory for eligibility).

3

3. View Statutory Gratuity Amount

The calculator computes your exact statutory entitlement using the 15/26 days statutory formula.

4

4. Verify Tax Exemption Status

Check tax exemption up to ₹20,00,000 under Section 10(10) and identify any taxable surplus.

Mathematics & Law

Formula & Calculation Logic

Mathematical Formula
Gratuity Amount = (15 × Last Drawn Monthly Basic + DA × Completed Years of Service) / 26

Under the Payment of Gratuity Act, 1972, gratuity for employees covered under the Act is computed based on 15 days of wages for every completed year of service, with month working days taken as 26. Wages include last drawn Basic Salary and Dearness Allowance. If the fraction of service exceeds 6 months (e.g. 7 years 7 months), it is rounded up to the next full year (8 years). Gratuity received by private sector employees is tax-exempt up to ₹20,00,000 under Section 10(10).

Expert Advisory Recommendation:

Online estimations provide mathematical clarity, but real-world filing involves matching multiple source ledgers (AIS/TIS, Form 26AS, GSTR-2B, broker P&L). Consult with an EasyFile Tax Specialist before submitting statutory tax returns to avoid mismatch intimations.

Got Questions?

Frequently Asked Questions

Expert answers on statutory compliance, exemptions, and calculation rules.

An employee must complete a minimum of 5 years of continuous service with the same employer to become eligible for gratuity upon resignation or retirement (5-year rule is waived in case of death or disablement).

Under Section 10(10) of the Income Tax Act, the lifetime cumulative tax-free exemption limit for gratuity received by non-government employees is ₹20,00,000.

Yes! An employer can pay an ex-gratia or higher gratuity than the statutory formula, but any amount exceeding ₹20,00,000 will be treated as taxable salary income.

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