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Gratuity calculator

Work out the gratuity you are owed when you leave, using the Code on Social Security that replaced the Payment of Gratuity Act on 21 November 2025.

Tax year 2026-27 Rules checked: November 2026 How we calculate

₹
yrs
mths
More options
₹

If allowances excluded from wages exceed half of your total pay, the excess counts as wages under section 2(88). Leave 0 to skip.

Gratuity payable₹2,30,7698 years counted
Tax-free part
₹2,30,769
Taxable part
₹0
Monthly wages used
₹50,000
Formula
₹50,000 ÷ 26 × 15 × 8
Gratuity before ceiling
₹2,30,769
Statutory ceiling
₹20,00,000
Gratuity payable
₹2,30,769
  • Covered employers pay 15 days’ wages (monthly wages ÷ 26 × 15) for every completed year, counting a final part-year of more than six months as a full year.
  • Service before 21 November 2025 counts too; the gratuity is worked out on the wages last drawn when you leave.
  • Not covered: the tax-free amount follows the income-tax formula of half a month’s average salary (last 10 months) per completed year.

This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency.

The formula

Section 53 of the Code on Social Security, 2020 gives 15 days’ wages for every completed year of service, or part of a year above six months, based on the wages last drawn. For monthly-paid employees, 15 days’ wages means the monthly wage ÷ 26 × 15.

Gratuity = last monthly basic + DA × 15 ÷ 26 × years counted

Worked example

₹50,000 basic + DA, 7 years 8 months

The eight months round the service up to 8 years, so the gratuity is ₹50,000 ÷ 26 × 15 × 8 = ₹2,30,769.

Gratuity payable₹2,30,7698 years counted
Tax-free part
₹2,30,769
Taxable part
₹0
Monthly wages used
₹50,000
Formula
₹50,000 ÷ 26 × 15 × 8
Gratuity before ceiling
₹2,30,769
Statutory ceiling
₹20,00,000
Gratuity payable
₹2,30,769

What changed with the labour codes

  • Wider definition of wages. Wages are basic pay, dearness allowance and retaining allowance – but if excluded items such as HRA, conveyance and special allowances add up to more than half of your total pay, the excess counts as wages. Enter your total monthly pay under More options to apply this rule.
  • Fixed-term employees no longer need five years: they are paid pro rata when the contract ends.
  • Ceiling remains as notified by the Central Government – currently ₹20 lakh.

When gratuity is paid

On superannuation, retirement, resignation, death or disablement, or at the end of a fixed-term contract. Part or all of it can be forfeited only if you were dismissed for misconduct causing loss, violence or an offence involving moral turpitude.

Questions people ask

How is gratuity calculated?

Monthly basic + DA ÷ 26 × 15 × years of service. A final part-year of more than six months counts as a full year. ₹50,000 a month for 7 years 8 months gives ₹50,000 ÷ 26 × 15 × 8 = ₹2,30,769.

Do I need five years of service?

Yes, for permanent employees, except on death or disablement. Fixed-term employees get gratuity pro rata when their contract ends – the Ministry of Labour says after one year of service.

What is the maximum gratuity?

₹20 lakh, the ceiling notified by the Central Government. Gratuity up to ₹20 lakh is tax-free for private-sector employees; government employees' gratuity is fully exempt.

Does service before 21 November 2025 count?

Yes. Gratuity paid on or after that date is calculated under the Code on the wages last drawn, for your whole period of continuous service.

Official sources

Rules checked: November 2026.

This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency. Read the full disclaimer.