Tool · Calculator

Gratuity Calculator: formula, rules and examples

ClearTax · cleartax.in Free Beginner India

A free calculator with the formula, worked examples and the rules: (last drawn salary x 15 x years) / 26 for employers covered by the Act, the five-year rule and its exceptions, the one-year rule for fixed-term staff, and the Rs 20 lakh cap and tax exemption.

  • Gratuity = last drawn basic plus DA x 15 x completed years / 26.
  • More than six months in the final year counts as a full year.
  • The payout cap and the tax-free limit for private employees are both Rs 20 lakh.
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The question it answers

  1. How is gratuity calculated in India, and when must an employer pay it?

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