Gratuity Calculator
What you're owed when you leave — (15 ÷ 26) × last-drawn wages × years of service, under the Code on Social Security.
On wages of ₹60,000 a month, counted as 10 years.
How this works
- Code on Social Security, 2020 (in force 21 Nov 2025): (15 ÷ 26) × last-drawn wages × years.
- Wages are basic + DA, but never less than half of all pay when you enter a package. Gratuity itself is left out of that test, following the Labour Ministry’s March 2026 FAQ.
- Permanent: 5 years of service. Fixed-term: 1 year under the contract. A final 6+ months counts as a full year.
- Ceiling ₹20L; the same amount is the tax-free limit for private-sector employees.
- Employers outside the Code (under 10 employees) pay under your contract — check with HR. Your employer’s policy and your contract decide the final amount.
How it’s worked out
How gratuity is calculated
Gratuity is a statutory payment under the Code on Social Security, 2020 (Chapter V), which replaced the Payment of Gratuity Act, 1972 and has been in force since 21 November 2025. It is worked out from your last-drawn wages and your completed years of service.
The 15/26 fraction is 15 days of pay for each completed year, treating a month as 26 working days. The Code lets the Central Government notify a different number of days; none has been notified, so 15/26 still stands.
What counts as wages
Wages under the Code are basic pay, dearness allowance and retaining allowance. Other pay such as HRA, conveyance, the employer’s PF contribution, bonus and overtime is left out only up to half of all remuneration; anything above half is added back to wages. This is the same 50% rule the in-hand salary calculator uses for PF, from the same piece of code.
The Ministry of Labour’s FAQs disagree on one point: whether gratuity itself counts in “all remuneration”. A December 2025 illustration counted it in; the March 2026 FAQ says gratuity, ESI and other retirement benefits are not included. This calculator follows the March FAQ. Enter your monthly package to see the add-back, or leave it blank if you already know your wages figure.
Five years, or one year on a fixed-term contract
Permanent employees still need five years of continuous service. Below that the entitlement is nil, except where service ends because of death or disablement, when the wait does not apply. Fixed-term employees are eligible once they complete one year under the contract, and the same formula then applies.
Once you are eligible, a final part-year of six months or more is rounded up to a full year. So 7 years and 7 months counts as 8 years, while 7 years and 5 months counts as 7. Leaving a few months later can be worth a whole extra year of gratuity.
The ₹20 lakh ceiling
The maximum gratuity currently notified is ₹20,00,000. Where the formula gives more, the calculator shows that the ceiling has been reached. An employer can still pay more under a better award, agreement or contract.
For non-government employees the income-tax exemption is capped at the same ₹20,00,000, counted across your whole career rather than per employer. Anything above that is taxable as salary.
Worked example
About ₹3,46,154 in gratuity
₹60,000 a month basic + DA for 10 years: about ₹3,46,154 in gratuity. An estimate from this calculator's own maths.
Open this example in the calculatorQuestions people ask
How is gratuity calculated in India?
Under the Code on Social Security, 2020: gratuity = (15 ÷ 26) × last-drawn monthly wages × completed years of service. Wages are basic plus DA, raised to half of all remuneration where allowances are more than half.
Do I get gratuity if I leave before 5 years?
A permanent employee generally needs five years of continuous service; below that the entitlement is nil. A fixed-term employee needs one year under the contract. The waiting period does not apply where service ends because of death or disablement.
Does a fixed-term employee get gratuity after one year?
Yes. Under the Code on Social Security, a fixed-term employee who completes one year under the contract is eligible, and the amount is worked out on the same 15/26 formula. A contract that ends before one year does not qualify.
Is gratuity calculated on basic salary or CTC?
On wages as the Code defines them: basic plus DA, but never less than half of all remuneration. If your allowances are more than half your pay, the excess is added to wages. Enter your monthly package in the calculator to apply this.
Does 4 years and 7 months count as 5 years for gratuity?
Not for a permanent employee. Eligibility is checked first, and 4 years 7 months falls short of five years. The six-month rounding rule applies to the years counted in the formula once you are already eligible, not to eligibility itself.
What is the maximum gratuity payable?
The ceiling currently notified is ₹20,00,000. Where the formula gives more, the statutory amount stops at the ceiling, though an employer can pay more under a better award, agreement or contract.
Is gratuity taxable?
For non-government employees, gratuity is exempt up to ₹20,00,000, counted across your whole career rather than per employer. Anything above that is taxable as salary. Your own position can differ, so confirm it with a qualified tax professional.
Do I get gratuity if I resign rather than being let go?
Yes. Gratuity is paid on resignation, retirement, termination or the end of a fixed-term contract once the qualifying period is met; the reason does not normally change the entitlement. The main exception is dismissal for specified misconduct, where it can be forfeited.
When did the new gratuity rules start?
On 21 November 2025, when the Code on Social Security came into force. The Ministry of Labour says gratuity on the new wages definition applies from that date, calculated on the wages last drawn when you leave.
Does a company with fewer than 10 employees have to pay gratuity?
The gratuity chapter of the Code applies to establishments with 10 or more employees, and one that was covered generally stays covered even if headcount later falls. Smaller employers may still pay gratuity voluntarily or by contract, on whatever terms your offer letter sets.
Figures for tax year 2026-27 from our own engine. Educational only — not tax or investment advice.