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📘 About the Gratuity Calculator
Gratuity is a lump sum your employer pays when you leave after long service. For employers covered by the law (10 or more employees) it is 15 days' wages for each year of service, with a month counted as 26 working days: gratuity = 15/26 × last monthly wages × years of service. A part year of 6 months or more counts as a full year.
The four labour codes in force since 21 November 2025 add two changes. Wages for gratuity are at least 50% of total pay — if basic + DA is less than half your salary, the excess allowances are added back. And fixed-term employees now qualify after one year, pro-rata. Permanent employees still need 5 years. The amount payable under the law is capped at ₹20 lakh, which is also the tax-free limit for private-sector employees.
🧮 Formula
Not covered by the Act: 15/30 × average wages of the last 10 months × completed years (no rounding up). Government employees use different rules — see the retirement gratuity calculator.
✏️ Worked examples
₹50,000, 10 years 7 months
You get| Gratuity payable (₹) | ₹3,17,307.69 |
| Gratuity by formula, before the cap (₹) | ₹3,17,307.69 |
| Wages used (₹) | ₹50,000 |
| Years counted | 11 |
| Tax-free part (₹) | ₹3,17,307.69 |
15/26 × 50,000 × 11 = ₹3,17,307.69.
Try this example →Basic ₹30,000 of ₹1,00,000 salary, 8 years
You get| Gratuity payable (₹) | ₹2,30,769.23 |
| Gratuity by formula, before the cap (₹) | ₹2,30,769.23 |
| Wages used (₹) | ₹50,000 |
| Years counted | 8 |
| Tax-free part (₹) | ₹2,30,769.23 |
50% rule raises wages to ₹50,000: gratuity ₹2,30,769.23.
Try this example →Fixed-term, ₹40,000, 2 years 3 months
You get| Gratuity payable (₹) | ₹51,923.08 |
| Gratuity by formula, before the cap (₹) | ₹51,923.08 |
| Wages used (₹) | ₹40,000 |
| Years counted | 2.25 |
| Tax-free part (₹) | ₹51,923.08 |
Pro-rata: ₹51,923.08.
Try this example →🧭 How to use this calculator
What you enter
- Last monthly basic + DA (₹)
- Total monthly salary / CTC (optional, ₹)Used for the 50% wage rule of the new labour codes.
- Completed years of service
- Extra months of service
- Employer covered by the Gratuity Act / Code?
- Employment type
What you get
- Gratuity payable (₹)
- Gratuity by formula, before the cap (₹)
- Wages used (₹)
- Years counted
- Tax-free part (₹)
💡 Eligibility
- Permanent employees: 5 years of continuous service (courts have accepted 4 years and 240 days in some cases).
- Fixed-term employees: 1 year, paid pro-rata (since 21 November 2025).
- No minimum service on death or disablement.
- The employer must pay within 30 days of it becoming due.
💡 Tax
- Private-sector employees: gratuity is tax-free up to ₹20 lakh in a lifetime (section 10(10)).
- Central and state government employees: fully tax-free.
❓ Frequently asked questions
What is the gratuity formula?
Gratuity = 15 × last drawn salary (basic + DA) × years of service ÷ 26. For ₹50,000 and 10 years: 15 × 50,000 × 10 ÷ 26 = ₹2,88,462.
Does 4 years 7 months count as 5 years?
For the amount, 6 months or more rounds up. For eligibility, the law needs 5 years of continuous service; some courts accepted 4 years and 240 working days.
What changed with the new labour codes?
From 21 November 2025, wages for gratuity must be at least 50% of total pay, and fixed-term employees qualify after 1 year instead of 5.
What is the maximum gratuity?
₹20 lakh under the law (an employer may pay more voluntarily). It is also the lifetime tax-free limit for private-sector employees.