Gratuity Calculator
Enter the wages your gratuity is computed on and your length of service to see what the Code entitles you to — including how the part-year rounding rule changes the answer.
Your service
What you are owed
Gratuity payable
using the — formula
- Monthly wages used —
- Service counted —
- Statutory ceiling —
- Formula result before the ceiling —
What this calculator assumes
- It takes the wage figure you typed at face value. Under the Code on Social Security, 2020 the base is basic pay plus dearness allowance plus retaining allowance, subject to a floor of 50% of total remuneration where the excluded components exceed half your pay. The calculator cannot see your salary structure, so applying that floor is your job before you type the number.
- For a covered employer the divisor is 26, on the convention that a working month is 26 days, and the figure used is the wage last drawn. For an uncovered employer it is 30, the customary basis is the average of the last 10 months rather than the last drawn figure, and part years are dropped rather than rounded.
- Service of less than 5 years is treated as earning nothing. The Code waives that minimum on death, disablement and on expiry of fixed-term employment; working journalists qualify at 3 years. None of those exceptions is modelled here.
- The result is capped at ₹20,00,000, the ceiling notified for gratuity payable under the Code. It is not the Central Government employees' ceiling of ₹25 lakh, which does not apply to private employment.
- Nothing here is a tax computation. The income-tax exemption is a separate limit and a lifetime aggregate; this page does not know how much of it you have already used at earlier employers, and government employees are exempt without any ceiling.
How gratuity is actually worked out
Start with the statute, because it changed and most calculators have not noticed. The Payment of Gratuity Act, 1972 was repealed on 21 November 2025, when the four Labour Codes came into force, and gratuity now sits in Chapter V of the Code on Social Security, 2020. The arithmetic is unchanged — but one of the rules around it moved, and it changes the figure many people should be entering.
Gratuity is not a share of your package. It is 15 days of pay for every year you served, and the answer turns on two numbers a payslip rarely makes obvious: the wages the Code says to use, and the years it lets you count. For a covered employer the formula is:
Gratuity = 15 × last drawn monthly wages × years of service ÷ 26
Take someone leaving after 10 years and 8 months on wages of ₹50,000 a month. The part year runs past six months, so service counts as 11 years. Fifteen times ₹50,000 is ₹7,50,000; across 11 years that is ₹82,50,000; divided by 26 it comes to ₹3,17,308. That is an entitlement, not a discretionary payment — a covered employer cannot pay less.
Why the divisor is 26, and when it becomes 30
The 26 is the part almost nobody can explain, and it is why a calculator built for another country gets this wrong. A working month is treated as 26 days, assuming one paid weekly off, so monthly pay divided by 26 is a day's wage and 15 of those days is roughly half a month's pay per year served. Divide by 30 instead and you are treating Sundays as working days, which shrinks the gratuity with the daily rate.
Establishments too small to fall within the Code are not bound by that convention. Where they pay gratuity voluntarily, the customary basis is 15/30 on the average of the last 10 months' salary, and part years are dropped rather than rounded. Same wages, same service, and the gap is close to a fifth: on ₹50,000 and 10 years 8 months, ₹3,17,308 covered against ₹2,50,000 uncovered. If you do not know which side of the line your employer sits on, ask HR before you plan around either number.
The wage base moved, and most calculators still have the old one
Gratuity has always been computed on basic plus dearness allowance rather than on what lands in the bank, which is why private structures hold basic to a third of gross pay — it drags provident fund and gratuity liability down with it. The Code closed that gap. Wages are basic, dearness allowance and retaining allowance, excluding HRA, conveyance, overtime, commission and bonus — but if those excluded components come to more than half of your total remuneration, the excess is added back. The base can never sit below 50% of what you are actually paid, however the structure is drawn.
That proviso is worth real money on an allowance-heavy package. Take ₹1,00,000 a month with basic plus DA of ₹40,000 and ten years at a covered employer. On the old reading the base is ₹40,000 and the answer is ₹2,30,769. Because the excluded ₹60,000 exceeds half of ₹1,00,000, the extra ₹10,000 is added back, the base becomes ₹50,000, and the entitlement is ₹2,88,462 — around ₹58,000 more. This calculator cannot see your salary structure, so work the floor out from your payslip and enter the higher of the two figures.
Five years, and the cliff at six months and a day
Two rules interact here and they are easy to confuse. Eligibility needs 5 years of continuous service. Rounding, once you are eligible, takes a part year of more than six months as a full year and drops anything up to and including six months — so exactly 5 years 6 months counts as 5, not 6.
The second rule cannot rescue you from the first. On ₹50,000 of wages with a covered employer:
- Leaving at 4 years 7 months — nothing at all.
- Leaving at 5 years 1 month — 5 years counted, ₹1,44,231.
- Leaving at 5 years 7 months — 6 years counted, ₹1,73,077.
Six months of patience is worth ₹1,44,231; the six months after that are worth ₹28,846 more. If you are negotiating a notice period it is worth knowing what those weeks are priced at. Expand the table above to see the same steps against your own wages.
The 5-year minimum is waived in three situations: death, disablement, expiry of fixed-term employment, the last of which entitles a fixed-term employee to gratuity pro rata with no qualifying period at all. Working journalists qualify at 3 years. None of those is modelled here, so if one of them is your situation, do not read a nil result as the answer. Also treat "four years and 240 days counts as five" with caution — it rests on High Court decisions applied inconsistently, not on settled law, and no calculator should build eligibility on it.
Two different ₹20 lakh limits, and why people confuse them
₹20 lakh appears twice here and means something different each time. The first is the ceiling on what the Code obliges an employer to pay, which is what this calculator applies. It has never sat in the statute itself, only in a government notification, which is why it can move without Parliament sitting.
The second is the income-tax exemption, which under the Income-tax Act 2025 sits at Section 19(1), Table. That one is a lifetime aggregate across every employer for non-government employees, not a fresh allowance at each job — take part of it on one exit and only the balance survives. No employer can see what you claimed elsewhere, so if you do not tell a new one the shortfall surfaces at assessment rather than at source. Government employees are outside all of this: their gratuity is fully exempt, with no ceiling.
The third number in circulation is ₹25 lakh, and it is the one to be careful with. It applies to Central Government employees only, under the CCS (Pension) Rules, and has no bearing on private employment. It is currently the commonest error in Indian gratuity writing, and a private-sector reader who plans around it is budgeting for money nobody owes them.
What this calculator cannot tell you
It answers one narrow question — what the formula produces on the numbers you entered:
- What your wage base actually is. It takes the figure you type. Applying the 50% floor to an allowance-heavy package is a payslip exercise you do first, and it is the difference most likely to be missing from any number you have been quoted.
- Whether your employer is covered. The select takes your word for it, and the answer moves by roughly a fifth.
- Whether your service is continuous. Long unpaid leave, a break and rejoin, or a transfer between group companies can all change what counts.
- Forfeiture. The Code allows gratuity to be forfeited, wholly or in part, in defined circumstances involving damage caused by the employee or misconduct.
- Your tax position. It applies the payment ceiling but does not know your remaining lifetime exemption, and it is not a tax computation.
- Timing. Gratuity becomes payable within a defined period after it falls due, and delay carries consequences for the employer. If yours is overdue, that is a question for the authority designated under the Code, not for a calculator.
Used for what it is good for — sanity-checking a full-and-final statement, or pricing a notice period against a service anniversary — the formula is short enough to check an employer's arithmetic in a minute, provided you have the wage base right first.
Common questions
Is gratuity worked out on my full salary or only on basic pay?
The base is "wages" as the Code on Social Security, 2020 defines them: basic pay, dearness allowance and retaining allowance, with HRA, conveyance, overtime, commission and bonus left out. There is a proviso that catches allowance-heavy structures — if the excluded components come to more than half of your total remuneration, the excess is added back, so the base can never fall below 50% of what you are paid. Someone on ₹1 lakh a month whose basic plus DA is ₹40,000 therefore has gratuity computed on ₹50,000, not ₹40,000.
I resigned at four years and nine months. Do I get anything?
On ordinary permanent employment, no. The 5-year minimum is tested against your actual continuous service, and the rule that rounds a part year of more than six months upwards applies only once you have crossed that threshold — it cannot be used to manufacture eligibility. The Code waives the minimum where service ends in death or disablement, and on expiry of fixed-term employment, where a fixed-term employee is paid pro rata. Working journalists qualify at 3 years. Note also that "four years and 240 days counts as five" is not settled law, whatever you have read.
My employer paid more than the formula. Is the extra tax free?
Nothing stops an employer paying above the formula, and better schemes are common in large companies. The tax exemption, though, is capped, and it is a different limit from the ceiling on what the Code obliges an employer to pay. Once the exempt amount is used up, the excess is taxable salary in the year you receive it and your employer should deduct tax on it. Treat the headline offer and the amount that reaches your bank as two different numbers, and ask for the computation in writing.
Do I get gratuity if I change jobs every three years?
On permanent contracts, no — and this is the largest cost of frequent switching that nobody prices in. Gratuity does not accumulate across employers the way provident fund does: each employment is tested separately against the 5-year minimum, and service that falls short earns nothing. The exception worth knowing is fixed-term employment, which the Code entitles to pro rata gratuity with no qualifying period, so a three-year fixed-term contract can pay where a three-year permanent stint pays nothing.
Is the ₹20 lakh limit per job or for my whole career?
Two different limits share that number. The ceiling on what the Code obliges an employer to pay applies to that employment. The income-tax exemption is a lifetime aggregate across every employer for non-government employees — claim part of it on one exit and only the balance survives for the rest of your working life. No employer can see what you claimed elsewhere, so the tracking is yours; if you do not tell a new employer, the shortfall surfaces at assessment rather than at source.
I have read that the limit is ₹25 lakh. Which is right?
₹25 lakh applies only to Central Government employees, under the CCS (Pension) Rules, raised when dearness allowance reached 50%. It has no application to private-sector gratuity, where the notified ceiling remains ₹20 lakh. Mixing the two is currently the commonest error in Indian gratuity content, and it is an expensive one to plan around. Government employees are also fully exempt from tax on gratuity with no ceiling at all, which is a separate point again.
Sources
Rates and rules on this page were read directly from the following sources on the dates shown. Figures change — if you are about to act on one, confirm it at the source.