Gratuity Calculator for Bank Employees (2026)
Calculate your gratuity as a PSU bank employee under the Payment of Gratuity Act, 1972. Enter your date of joining, date of leaving, last drawn Basic Pay and DA — the calculator shows your qualifying years of service, the gratuity formula amount, and the final payable figure after the ₹20 lakh statutory ceiling.
- Formula: 15/26 × (Basic + DA) × completed years of service
- Statutory ceiling: ₹20,00,000 (Payment of Gratuity (Amendment) Act, 2018, effective 29 March 2018)
- Minimum service: 5 continuous years — waived only for death or permanent disablement
- Year rounding: 6 months or more in the final year counts as one full year (Section 4(2))
- Tax treatment: Fully exempt within the ₹20 lakh ceiling — PSU bank staff are “covered employees” under the Act, not government employees with an unlimited exemption
| Actual service rendered | — |
| Completed years (rounded per Gratuity Act §4(2)) ≥6 months rounds up to a full year | — |
| Basic + DA (wage used) | — |
| Formula: (Basic+DA) × 15/26 × years | — |
| Gratuity as per formula | — |
| Statutory ceiling (Payment of Gratuity Act) | ₹20,00,000 |
| Gratuity Payable | — |
| Tax-exempt amount (Sec 10(10)(ii), least of actual / ₹20L / formula) | — |
| Taxable amount (any ex-gratia paid above the ceiling) | — |
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How Gratuity Is Calculated for Bank Employees
Gratuity for PSU bank employees follows the Payment of Gratuity Act, 1972, in four steps:
Worked Example
A Scale II officer joins on 3 June 1994 and retires on superannuation on 30 June 2026 — 32 years 27 days of service, rounded to 32 years (the 27 days round down, being under 6 months). Last drawn Basic Pay is ₹93,960 and DA at retirement is 27.83%, giving Basic+DA of ₹1,20,109. Gratuity = ₹1,20,109 × 15/26 × 32 years = ₹22,17,398. Since this exceeds the ₹20 lakh ceiling, the gratuity actually payable — and fully tax-exempt — is capped at ₹20,00,000.
Frequently Asked Questions — Gratuity Calculator
What is the gratuity formula for bank employees in India?
Gratuity for PSU bank employees is calculated as: (Last drawn Basic Pay + DA) × 15/26 × Completed years of service. This is the standard formula under the Payment of Gratuity Act, 1972, which applies to bank employees as “covered employees” of an establishment with 10 or more staff. The 15/26 factor represents 15 days’ wages for every completed year of service, based on a 26-day working month.
What is the maximum gratuity amount a bank employee can receive?
The maximum gratuity payable, and the maximum amount exempt from income tax, is ₹20,00,000. This ceiling was raised from ₹10 lakh via the Payment of Gratuity (Amendment) Act, 2018, effective 29 March 2018. If the formula amount exceeds ₹20 lakh, the employee receives only ₹20 lakh under the Act — any amount above this, if paid voluntarily by the employer as ex-gratia, would be fully taxable.
How many years of service are needed to be eligible for gratuity?
A minimum of 5 years of continuous service is required to be eligible for gratuity under the Payment of Gratuity Act. This condition is waived only if the employee’s service ends due to death or permanent disablement — in these cases, gratuity is payable regardless of how many years the employee has served, even if it is less than 5 years.
How is a fractional year of service rounded for gratuity calculation?
Under Section 4(2) of the Payment of Gratuity Act, if an employee has completed more than 6 months of service in the final year, it is rounded up and counted as one full additional year. If it is less than 6 months, it is ignored. For example, 24 years 7 months of service counts as 25 years for the gratuity formula, while 24 years 5 months counts as only 24 years.
Is gratuity taxable for PSU bank employees?
Gratuity received by PSU bank employees is exempt from income tax up to ₹20 lakh under Section 10(10)(ii) of the Income Tax Act, since bank employees are treated as non-government “covered employees” under the Payment of Gratuity Act — not as government employees, who get an unlimited exemption. Since the Act itself caps the maximum payable amount at ₹20 lakh, the amount actually received by a bank employee is normally fully tax-exempt.
Does Special Allowance or PQP count towards gratuity for bank employees?
The standard gratuity formula uses Basic Pay + DA only. Some bipartite settlement clauses declare Special Allowance and PQP (Professional Qualification Pay) as counting for “superannuation benefits,” which some banks interpret as including gratuity — in practice this varies by bank and settlement period. This calculator uses the Basic+DA basis, consistent with the standard statutory formula and with this site’s other calculators; check with your bank’s HR/pension cell on whether your bank includes SA/PQP in its internal computation.