Statutory Compliance Engine

Pakistan Gratuity & Terminal Tax Calculator

Calculate exact statutory terminal gratuity under Standing Order 12(6) of the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, and evaluate tax exemptions under Clause (13), Part I, Second Schedule of the Income Tax Ordinance, 2001.

PKR
Statutory Wage Rule: Standing Order 12(6) calculates gratuity strictly on last drawn basic wage plus fixed Cost of Living Allowance (COLA). House rent allowance, conveyance, medical, and bonuses are strictly excluded by law.
Gross Statutory Gratuity
PKR 750,000
Formula: PKR 150,000 × 5 Qualifying Years
⚖ 4 Yrs 8 Mos rounds up to 5 Years (>6 Months Rule)
Actual Service
4 Yrs, 8 Mos
Effective Years
5 Years
FBR Tax Exempt
PKR 750,000
Taxable Amount
PKR 0
Estimated Net Gratuity Payout
PKR 750,000
No withholding tax applicable (100% exempt fund).
View Statutory Calculation Details
  • Statutory Benchmark: 30 days basic wages for each completed year of service or part thereof in excess of 6 months. For monthly-rated permanent workmen, 30 days equals 1 month of basic salary.
  • Minimum Service Threshold: Statutory gratuity only accrues after completion of at least 12 months (1 full year) of continuous service.
  • Rounding Mechanism: Under Standing Order 12(6), service in excess of 6 months (7 to 11 months) legally counts as one complete additional year. Service of 6 months or less is disregarded.
  • Tax Exemption Authority: Income Tax Ordinance, 2001, Second Schedule, Part I, Clause (13). Approved funds registered under Sixth Schedule Part III provide 100% tax exemption.
Governing Statutes: Industrial & Commercial Employment (Standing Orders) Ordinance, 1968 (Standing Order 12(6)); Income Tax Ordinance, 2001 (Section 12 read with Second Sched., Part I, Cl. 13 & Sixth Sched., Part III).

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