India gratuity calculator.
Enter monthly basic salary, dearness allowance (DA), and years of continuous service. Calculate gratuity payout under the Payment of Gratuity Act 1972: (Basic+DA) x 15/26 x years, capped at ₹20,00,000. Eligibility 5+ years. No email wall.
Base salary, before HRA, allowances, and deductions.
DA only (if applicable). Leave at 0 if none.
Can be decimal (e.g., 4.6 for 4 years and 7 months). Minimum 5.0 for gratuity eligibility.
Gratuity calculation
- Basic + DA
- ·
- Gratuity divisor (15/26 days)
- 0.577
- Completed years of service
- ·
- Gratuity (before cap)
- ·
- Cap (₹20,00,000)
- −
Gratuity payable
·
·
Formula: (Basic + DA) x (15 / 26) x Completed Years, capped at ₹20,00,000. Gratuity is tax-exempt up to the cap under Section 10(10)(w) for non-government employees. Accrued monthly at 4.81% into Versatile's LIC group gratuity scheme.
How gratuity works in India.
Eligibility: 5 years
Statutory minimum continuous service is 5 years (or 4 years and 240 days convention). Below 5 years, zero gratuity is mandated. Versatile can offer a separation bonus at founder discretion, taxed differently.
Formula: 15/26 rule
(Basic + Dearness Allowance) x (15 / 26) x Completed Years of Service. The 15/26 factor is statutory (15 days of wages per 26-day working month). Capped at ₹20,00,000 tax-exempt payout.
Funding: LIC group policy
Versatile accrues 4.81% of basic monthly into an LIC group gratuity scheme. On certified exit, LIC pays the employee directly. No employer cash crunch. Accrual continues on EOR-to-entity transition via group policy assignment.
Worked example
On the default ₹1,00,000 monthly Basic with 5 years of service, the gratuity payable is ₹2,88,462, which is 15 days of pay per completed year on a 26 day month.
Gratuity calculator, answered.
The gratuity math for every India exit.
When is gratuity payable?
On exit (resignation, retirement, death, or disability), if the employee has completed 5 years of continuous service (or 4 years and 240 days, whichever is earlier). Below 5 years, no gratuity is due under the Payment of Gratuity Act. Versatile tracks tenure to the day.
What is the gratuity formula?
Gratuity = (Basic + Dearness Allowance) x (15 / 26) x Completed Years of Service. The 15/26 factor is statutory (15 days wages per 26 working days). Cap: ₹20,00,000. Gratuity accrues at 4.81% of basic each month via Versatile's LIC group policy.
Is gratuity taxable?
Gratuity up to ₹20,00,000 is fully tax-exempt under Section 10(10)(w) for non-government employees. Anything above ₹20L is taxable as salary. Versatile files the gratuity payout on the exit Form 16, tax-exempt.
How does Versatile fund gratuity?
Via a Group Gratuity Scheme with LIC. Each month, 4.81% of basic salary is set aside. On certified exit, LIC pays the employee directly. Versatile holds the policy and coordinates the payout. No cash crunch for the employer.
What if the employee leaves before 5 years?
Under the Payment of Gratuity Act, no gratuity is due if continuous service is less than 5 years (or 4 years and 240 days). However, Versatile can structure a separation bonus at your discretion; it would be taxed differently (as a salary component). Check with your CA.
When is this calculator the wrong answer?
When the employee has complex service history (multiple breaks in service, transfer between roles, disputed tenure). At that point, Versatile's compliance team will reconcile payroll records and compute the exact gratuity on exit.
Longer reading: EOR services in India · India employment and gratuity rules · Related tool: severance and exit cost calculator
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