New labour code rules built in
Fixed-term employees qualify after one year, and the 50% wage floor is applied automatically when you switch it on.
Updated for the Labour Codes in force from 21 Nov 2025
Gratuity Calculatorfor India's New Labour Codes
Use this free gratuity calculator to see exactly how much gratuity you will receive when you resign, retire or finish a fixed-term contract. It applies the Code on Social Security, 2020, the new 50% wage rule and the ₹20 lakh tax-free limit, and it shows your result in seconds.
- 15/26 statutory formula
- 1-year rule for fixed-term staff
- Tax-free and taxable split
- No sign-up, runs in your browser
Why this tool
A Gratuity Calculator Built for the 2026 Rules
Most gratuity tools still use the old Payment of Gratuity Act logic. This one follows the current labour codes and explains every number it shows.
Service counted to the day
Enter your joining and exit dates. The tool applies the six-month rounding rule exactly, so you never guess your counted years.
Old vs new wage comparison
See how much extra gratuity the wider definition of wages gives you compared with Basic + DA alone.
Tax-free and taxable split
Accounts for the ₹20 lakh lifetime exemption, earlier claims and full exemption for government employees.
Stay-longer projection
A live chart shows what your gratuity grows to over the next five counted years, which helps you time a job switch.
Private and instant
Everything runs in your browser. Nothing is stored or sent anywhere, and there is no sign-up.
How to use
How to Calculate Gratuity in 5 Steps
The calculator updates as you type, so you can test different dates and salaries quickly.
Choose your employee type
Pick permanent, fixed-term, or death or disability. This sets the minimum service needed.
Confirm employer coverage
Most firms with 10 or more employees are covered. Otherwise, gratuity depends on company policy.
Enter your last drawn wages
Type your monthly Basic + DA. Next, switch on the 50% wage rule if allowances make up most of your pay.
Add your service period
Use exact dates or years and months. The counted years appear under your result.
Check the tax split
Mark government service or enter any exemption claimed before. Then copy your result to share it.
The formula
Gratuity Formula Under the New Labour Code
The core formula did not change when the Code on Social Security, 2020 replaced the Payment of Gratuity Act. You earn 15 days of wages for every completed year of service. Because a month is treated as 26 working days, the monthly formula divides by 26.
What changed is the input. Wages now means Basic + DA + retaining allowance, and they must be at least half of your total pay. As a result, many employees with a low basic salary now get a larger gratuity.
Worked example
Suppose your last drawn Basic + DA is ₹50,000 and you worked 7 years and 8 months. The extra 8 months is more than six, so service counts as 8 years. Therefore, your gratuity is ₹50,000 × 15 × 8 ÷ 26 = ₹2,30,769.
Employers not covered by the law
If your employer is outside the law, gratuity is paid only under company policy. In that case, the usual method is half a month of salary for each completed year, so the divisor becomes 30 and part years are ignored.
Gratuity formula
Gratuity = Wages × 15 × Years ÷ 26
- Wages: last drawn monthly Basic + DA, raised to 50% of total pay where required.
- 15: days of wages earned for each year of service.
- 26: working days in a month for monthly-rated staff.
- Years: completed years, plus one if the last part year is more than six months.
- Ceiling: statutory gratuity is capped at ₹20 lakh.
| Monthly pay of ₹50,000 | Old structure | New structure |
|---|---|---|
| Basic + DA | ₹12,000 | ₹25,000 |
| Wages for gratuity | ₹12,000 | ₹25,000 |
| Gratuity for 10 years | ₹69,231 | ₹1,44,231 |
Eligibility
Who Is Eligible for Gratuity?
Gratuity is paid when employment ends through resignation, retirement, termination, contract completion, death or disablement. The minimum service depends on how you were employed.
| Employee type | Minimum continuous service | How service is counted |
|---|---|---|
| Permanent or regular | 5 years | Completed years, plus one year for more than six months |
| Fixed-term employee | 1 year (new since 21 Nov 2025) | Pro rata for each counted year |
| Death or disablement | No minimum | Paid to the employee or nominee |
| Employer not covered | As per company policy | Usually completed years only |
Close to five years? Some courts have treated 4 years plus 240 working days in the fifth year as five years of continuous service. However, employers do not always accept this, so check your policy before you resign.
Tax
Is Gratuity Taxable? Tax-Free Limit Explained
Gratuity received by central or state government employees is fully tax-free. For everyone else, only part of it is exempt.
The tax-free portion is the lowest of three amounts: the gratuity you actually receive, the amount worked out with the statutory formula, and ₹20 lakh. Any excess is added to your salary income and taxed at your slab rate.
Remember that ₹20 lakh is a lifetime limit. If you claimed an exemption with an earlier employer, enter it in the calculator so the remaining limit is correct.
Payment
When Is Gratuity Paid?
Gratuity becomes payable when you leave the organisation after meeting the eligibility rule. Your employer should pay it within 30 days of it becoming due. Otherwise, you are entitled to simple interest on the delay.
Many employers show gratuity inside your CTC at about 4.81% of basic salary, which is 15 ÷ 26 ÷ 12. That line is only a provision, though. You receive the money once, at exit.
Benefits
Benefits of Using This Gratuity Calculator
- Verify your full and final settlement before you sign it.
- Time your resignation to cross the six-month mark for an extra year.
- Compare job offers by the gratuity each salary structure builds.
- Plan tax on gratuity above the ₹20 lakh limit in advance.
- Help HR and payroll teams estimate liability for fixed-term staff.
- Add a realistic lump sum to your retirement plan.
FAQ
Gratuity Calculator FAQs
Quick answers to the questions employees ask most about gratuity in India.
How is gratuity calculated in India?
Gratuity is 15 days of last drawn wages for every completed year of service. For monthly-paid staff, the formula is wages × 15 × years ÷ 26. Service of more than six months in the final year counts as a full year. If your employer is not covered by the law, the divisor is usually 30 and only completed years count.
Can I get gratuity after 1 year of service?
Yes, if you are a fixed-term employee. Since the Code on Social Security, 2020 took effect on 21 November 2025, fixed-term employees qualify after one year of continuous service. Permanent employees still need five years, except in cases of death or disablement.
Will I get gratuity for 4 years and 8 months of service?
Usually not, because permanent employees need five years of continuous service. However, some courts have treated 4 years plus 240 working days in the fifth year as five years. Check your employer's policy or take legal advice if you are close to the line.
How much gratuity is tax-free?
Government employees get fully tax-free gratuity. For other employees, the exempt amount is the lowest of the gratuity received, the statutory formula amount and ₹20 lakh. The ₹20 lakh limit applies across your whole career, so earlier exemptions reduce it.
What is the maximum gratuity amount?
Statutory gratuity is capped at ₹20 lakh. An employer can still pay more under a contract, award or company policy. Any amount above your tax-free limit is taxed as salary.
Does the 50% wage rule increase my gratuity?
Often, yes. If allowances left out of wages exceed half of your total pay, the excess is added back to wages. Since gratuity is based on wages, a low basic salary structure now produces a higher payout. Switch on the 50% wage rule above to see the difference.
When must my employer pay gratuity?
Gratuity is payable when you leave through resignation, retirement, termination, contract completion, death or disablement. The employer should pay it within 30 days of it becoming due, and delays attract simple interest.
Is gratuity part of my CTC?
Many employers include gratuity in CTC at about 4.81% of basic salary. That is only a provision, not a monthly payment. You receive the actual amount once, when you exit after meeting the eligibility rule.
Know Your Gratuity Before You Resign
A few months of service or a change in salary structure can change your payout by lakhs. Use the gratuity calculator to check your numbers, then plan your exit and taxes with confidence.
Calculate my gratuityMore salary and savings calculators
This gratuity calculator gives an estimate for general information. Your actual payout depends on your employment records, salary components, company policy and applicable law. Please confirm with your employer or a tax professional before making decisions.