A reward for your dedication. Our 2026 engine provides absolute clarity on your statutory retirement benefits using verified labor law algorithms.
Running Statutory Engine...
Gratuity is a defined benefit plan provided by an employer to an employee for services rendered to the organization. It is usually paid at the time of retirement, resignation, or death, provided the employee has completed at least five years of continuous service.
In 2026, for the purpose of gratuity calculation, a "month" is considered to have 26 working days. This is why the formula uses 15/26 to represent 15 days of salary for every year worked.
2026 Retirement Benefit Analysis
Gratuity is a lump sum amount paid by an employer to an employee as a mark of recognition for their long-term service.
Any employee who has completed a minimum of 5 years of continuous service with the same employer is eligible.
The 5-year requirement is waived in the event of the employee's death or disablement due to an accident or disease.
Formula: (Last Drawn Basic + DA) * 15/26 * Number of years of service.
15 represents half a month's salary, and 26 represents the total number of working days in a month.
For government employees, it's fully exempt. For private employees, it's exempt up to ₹20 Lakh (as per current limits).
Technically, 4 years and 190 days (if the company works 6 days a week) is often counted as 5 years by courts.
It is mandatory for any organization with 10 or more employees on any single day in the preceding 12 months.
The calculation is based on your 'Last Drawn Salary,' which include Basic Pay and Dearness Allowance (DA) only.
Only if the employee's services were terminated due to violent conduct or an act of moral turpitude.
The maximum statutory limit for gratuity is ₹20 Lakh. Any amount paid above this is taxable.
An employee should apply in Form I to the employer within 30 days of the date it becomes payable.
Yes, employees must fill out Form F to nominate family members to receive the amount in case of their death.
Yes, provided you have completed the minimum eligibility period of 5 years.
Service must be 'continuous.' Authorized leave, strikes, or lockouts usually don't count as a break.
Gratuity is a statutory right; it must be paid out of the gratuity fund which is usually managed by an insurer like LIC.
Yes. An employer can pay 'Ex-Gratia' which is more than the statutory amount if they choose.
Yes. HQCalc by Shivam Sagar uses the official formula from the Payment of Gratuity Act, 1972.
Yes. All professional retirement tools on HQCalc are free to use.
If the last year of service is more than 6 months (e.g., 5 years 7 months), it is rounded up to the next year (6 years).
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