Drop in your basic salary and years of service and the calculator applies the Labour Act 2074 rule — one month of basic pay per completed year — then splits the output into the tax-free first Rs 5 lakh and any taxable amount above it.
Basic pay drives the payout — allowances excluded
Each year of service adds another month of basic pay to the running total. The split between tax-free and taxable flips the moment the cumulative figure crosses Rs 5,00,000 — often around year five or six at mid-level basic salaries.
| Year | Per-year gratuity | Cumulative total | Tax-free | Taxable |
|---|---|---|---|---|
| Enter salary and years of service to see the breakdown | ||||
Workers registered under the Social Security Fund do not receive a separate gratuity cheque — the employer's 20% SSF contribution rolls gratuity, medical, accident and pension into one scheme. If that's you, the number to watch is your SSF contribution, not this calculator.
Open the SSF calculatorGratuity is a statutory end-of-service benefit under Section 53 of Nepal's Labour Act 2074. Any non-SSF employer has to pay it when an employee leaves after at least a year of continuous service — whether the exit is resignation, termination or retirement.
The default formula is simple: one month of basic pay for every completed year. In practice, some employers round up partial years where six or more months have been served, others stick strictly to whole years — this calculator lets you toggle between both approaches.
Employer pays gratuity directly under Labour Act 2074.
Gratuity is bundled into the employer's 20% SSF contribution — no standalone payout.
First Rs 5,00,000 is tax-free; the excess is taxed at that year's slab rates.
It's a lump-sum end-of-service payout required by Section 53 of the Labour Act 2074. Any time an employee who has served at least a year continuously leaves the organisation — resignation, dismissal or retirement — the employer owes them gratuity.
Basic monthly salary × years of service. Basic only — allowances, festival bonus and incentive payouts sit outside the calculation. For partial years, six or more months is often rounded up to a full year, but that rounding is an HR convention, not a hard statutory rule.
The first Rs 5,00,000 of the payout is tax-free under IRD rules. Anything above that limit is added to your income for the year and taxed at the applicable slab rate.
A minimum of one continuous year of service under Labour Act 2074, Section 53. Anything short of twelve months earns no gratuity.
You don't receive gratuity as a separate line item. The employer's 20% SSF contribution already covers the obligation — alongside medical, accident and pension benefits — so SSF members collect their retirement benefit through the fund rather than as a lump-sum gratuity.
