Gratuity Calculator
Gratuity under the Code on Social Security from your last drawn wages and years of service, with the six-month rounding rule and the tax-free limit.
Result
Gratuity: ₹3,17,307.69Estimate
For seasonal establishments the Code uses 7 days of wages a season instead. Employers may pay more than the Code requires.
- Years counted
- 11
- Exempt from income tax
- ₹3,17,307.69Estimate
- Taxable
- ₹0.00Estimate
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Results are arithmetic on the returns, rates and horizons you enter, not a forecast and not investment, tax or retirement advice. The site supplies no expected return, inflation rate, contribution limit, tax rate or withdrawal rate. Real returns vary from year to year, and fees, taxes and the order of returns all change the outcome. Check anything that matters with a qualified adviser. Read the full disclaimer
How to use the Gratuity Calculator
- Enter your last drawn monthly wages, basic pay plus dearness allowance.
- Enter your completed years and months of continuous service.
- Say why the employment is ending. Fixed-term contracts and death or disablement have shorter service rules.
- Read the gratuity, the years counted and how much of it is exempt from income tax.
The formula
Gratuity rewards long service with a lump sum when employment ends. The Code on Social Security, 2020 sets the minimum an employer must pay. Many employers’ schemes pay more.
day's wages = last monthly wages ÷ 26years counted = completed years, + 1 if the extra months are more than sixgratuity = day's wages × 15 × years countedThe divisor of 26 treats a month as 26 working days, so 15 days’ wages is a little more than half a month’s pay.
What changed with the Code
The Code replaced the Payment of Gratuity Act, 1972 from 21 November 2025. The formula is the same. What changed is who qualifies: fixed-term employees now get gratuity after a year. It also changed what counts as wages: allowances above half of pay are now added back. For anyone leaving on or after 21 November 2025, the Ministry of Labour says gratuity for all their years of service uses the Code’s definition of wages.
With your numbers
- Gratuity = monthly wages × 15 ÷ 26 × years counted
- A final part-year of more than six months counts as a full year
Quick reference
For seasonal establishments the Code uses 7 days of wages a season instead. Employers may pay more than the Code requires.
| Example | Gratuity |
|---|---|
| ₹50,000, 10 years 7 months | ₹3,17,307.69 |
| ₹50,000, 10 years 6 months | ₹2,88,461.54 |
| ₹30,000, 5 years | ₹86,538.46 |
| ₹40,000, fixed term, 1 year 2 months | ₹23,076.92 |
| ₹2,00,000, 30 years | ₹34,61,538.46 |
| ₹60,000, 4 years 8 months |
Where the numbers come from
The fixed figures this calculator relies on, and the published source each one was checked against. How the calculators are built and checked
5 sources
Code on Social Security, 2020, https://www.labour.gov.in/static/uploads/2025/07/b0620548445580767b5c0d18c95c26f7.pdf, s.53(2): "fifteen days' wages"
Used for
- Gratuity: days of wages for each completed year of service.
Code on Social Security, 2020, https://www.labour.gov.in/static/uploads/2025/07/b0620548445580767b5c0d18c95c26f7.pdf, s.53(2) Explanation 3: "dividing the monthly rate of wages last drawn … by twenty-six"
Used for
- Gratuity: a month's wages are divided by this to give a day's wages.
Code on Social Security, 2020, https://www.labour.gov.in/static/uploads/2025/07/b0620548445580767b5c0d18c95c26f7.pdf, s.53(1): "continuous service for not less than five years"
Used for
- Gratuity: continuous service needed, except on death, disablement or the end of a fixed term.
Ministry of Labour and Employment, FAQs on the Labour Codes (16.03.2026), Q14 and Q19, https://www.labour.gov.in/static/uploads/2026/03/a4ccf4c6d97c4f1f36a6d83f8c64213d.pdf
Used for
- Gratuity: service a fixed-term employee needs.
Notification S.O. 1420(E) of 29.03.2018 under the Payment of Gratuity Act, 1972, read with the Income-tax Act, 2025, s.19(1) Table Sl. 5 and 6, https://www.incometaxindia.gov.in/income-tax-act-2025
Used for
- Gratuity: most that is exempt from income tax for a non-government employee.
Common questions about the Gratuity Calculator
- How is gratuity calculated?
- Fifteen days of wages for every completed year of service, using the last monthly wages drawn. A day's wages is the monthly wage divided by 26, the working days in a month. So gratuity = monthly wages × 15 ÷ 26 × years. For ₹50,000 a month and 11 years that is about ₹3.17 lakh.
- Does a part year count?
- A final part-year of more than six months counts as a full year. Ten years and seven months counts as eleven; ten years and six months counts as ten.
- Who is eligible?
- Under the Code on Social Security, in force from 21 November 2025, an employee needs at least five years of continuous service. A fixed-term employee is eligible after one year, pro rata. On death or disablement no minimum applies.
- What counts as wages?
- Basic pay, dearness allowance and retaining allowance. If the allowances the Code excludes, such as HRA and conveyance, come to more than half of your total pay, the amount above half is added back into wages. That raises gratuity for people whose basic pay is a small share of their salary.
- Is gratuity taxable?
- For non-government employees, gratuity is exempt up to ₹20 lakh over a lifetime, under both tax regimes. Anything above that is taxed as salary. Government employees' gratuity is fully exempt.