Terminal Benefit & Corporate Liability Engine

Gratuity Payout & Taxation Estimator

Calculate the exact end-of-service gratuity payout. Automatically adjust tenure rounding rules and divisor formulas based on company coverage under the Payment of Gratuity Act, 1972.

⚠️ Legal Ineligibility: The employee has not completed 5 continuous years of service (often strictly defined as 4 years and 240 days). Under the Payment of Gratuity Act, 1972, the mathematical gratuity payable is legally Zero.
Legal Coverage & Remuneration
Use the absolute last drawn monthly salary. Exclude HRA and other allowances.
Current Section 10(10) lifetime limit.
Employee Tenure History
Macro Payout Overview
Effective Calculation Tenure
0
Based on rounding rules
Statutory Divisor Applied
15/26
26-day working month
Taxable Gratuity Component
0
Exceeds ₹20L Limit
Tax-Exempt Component
0
Section 10(10) Shield
Final Cash Distribution (Tax-Free vs Taxable) Tax-Exempt Payout Taxable Component

Tenure & Rounding Logic

Actual Served Time0 Yrs, 0 Mos
Regime RuleMonths ≥ 6 round up
Final Multiplier0 Years

Formula Computation

Applicable Salary0
Daily Wage Equiv.0
15-Day Payout0

Taxation Subtotal

Total Gratuity Yield0
(-) Section 10(10) Cap0
Subject to Income Tax0
Total Gross Gratuity Payout (Before Tax Deduction) \u20B90

The Real-World Story: Covered vs. Not Covered

Gratuity is a financial "thank you" from an employer for long-term loyalty, but the mathematics dictating that payout rely entirely on the Payment of Gratuity Act, 1972. If a company has 10 or more employees, they are legally "Covered" by the Act. If they have fewer, they are "Not Covered," which changes the mathematical rules drastically.

The 26-Day Divisor Trap: For employees Covered under the Act, the law dictates that a working month only has 26 days (removing 4 Sundays). The formula is $G = \frac{15}{26} \times \text{Salary} \times \text{Tenure}$. This artificially inflates the "daily wage" calculation, resulting in a significantly higher payout than the standard 30-day month used for Uncovered employees.

The Rounding Dispute

  • Covered Employees: The Act favors the employee. If you work 6 years and 7 months, the tenure is rounded up to exactly 7 years.
  • Not Covered Employees: The rules are strict. Months are completely ignored. If you work 6 years and 11 months, the calculation is strictly based on 6 years.

⚠️ Why This is for "Reference Only"

The 5-Year Cliff: The overarching rule of gratuity is that an employee must complete 5 continuous years of service with the same employer. If you resign at 4 years and 10 months, you get zero. (Exceptions apply for death or disablement). Tax Limits: The Section 10(10) tax exemption is a lifetime limit across all employers. If you claimed ₹5 Lakhs in exemption from a previous job, your remaining tax-free shield for your current job is reduced to ₹15 Lakhs.