India Gratuity Calculator
Find the gratuity you get when you leave a job in India, how many years count, how much is tax-free, and what staying a little longer adds.
Or use your dates (fills in the years, months and days above):
Covered if 10 or more people worked there on any day in the last 12 months (offices, shops, factories, mines, plantations, ports, railways). Once covered, always covered. Most companies are.
You and how you are leaving
On death or disablement there is no 5-year minimum. Gratuity on death goes to your nominee or heirs.
Labour Code wages from Nov 2025 · check
Leave out bonus, overtime and your employer's PF contribution.
Pay history (not covered: the last 10 months are averaged)
Tax
How your gratuity is worked out
15 days' wages for every year you have worked.
- 1
A day's wage
₹50,000 a month÷ 26 working days= ₹1,923.08 a day
- 2
15 days a year
₹50,000 × 15÷ 26= ₹28,846.15
- 3
Years counted
8 y 7 m worked7 m is over 6 → +1= 9 years
- 4
Your gratuity
₹28,846.15 × 9= ₹2,59,615All tax-free
Read more: the formula, a worked example, the 5-year rule, the new Labour Code and tax
Gratuity is a lump sum your employer pays when you leave after at least 5 years, as a thank-you for long service. It is set by the Payment of Gratuity Act 1972, which the Code on Social Security, 2020 replaced from 21 November 2025 (as reported) check. The formula is the same under both.
The formula
covered by the law:
gratuity = last monthly (basic + DA) × 15 ÷ 26 × years counted
years counted = completed years, +1 if the part year is more than 6 months
most payable = ₹20 lakh
not covered by the law (tax-free limit):
gratuity = average (basic + DA) of the last 10 months × 15 ÷ 30 × completed years
tax-free = smallest of: gratuity paid, the formula amount, ₹20 lakh minus tax-free gratuity already received
taxable = gratuity paid − tax-free
Why 15 and 26? You get 15 days' wages for each year, and a month is taken as 26 working days (30 days minus 4 Sundays).
Worked example
Basic pay + DA of ₹50,000 a month, 8 years 7 months with a covered employer, resigning.
- A day's wage: ₹50,000 ÷ 26 = ₹1,923.08
- 15 days a year: ₹50,000 × 15 ÷ 26 = ₹28,846.15 for each year
- Years counted: the 7 months are more than 6, so 8 years 7 months counts as 9 years
- Gratuity: ₹28,846.15 × 9 = ₹2,59,615.38, so ₹2,59,615
That is under ₹20 lakh, so all of it is tax-free. If the employer were not covered, the same pay would give ₹50,000 × 15 ÷ 30 × 8 = ₹2,00,000 (the 7 months don't count). Staying until 9 years 6 months and 1 day would make it 10 years: ₹2,88,462.
Who gets gratuity
- 5 years of continuous service, whether you resign, retire or are let go.
- Death or disablement: no minimum. On death it is paid to your nominee or legal heirs.
- 4 years and 240 days: the law deems you to have worked a year if you actually worked 240 days in it (190 days if you work below ground in a mine or your workplace runs less than 6 days a week). Some High Courts have used this to count a fifth year of 240 (or 190) days as complete. It is a court interpretation, not a written rule, so many employers still ask for a full 5 years check.
- Fixed-term employees (under the new Labour Codes) get gratuity after 1 year of service, worked out the same way check.
- Gratuity can be held back (wholly or partly) if you are dismissed for misconduct that caused loss to the employer, violence or an offence involving moral turpitude.
New Labour Code: the 50% wage rule
Under the Code on Social Security, "wages" means basic pay, DA and retaining allowance. Items like HRA, conveyance, overtime, bonus and commission are left out, but if what's left out is more than half of your total pay, the extra counts as wages. In effect, your gratuity wage can't be less than half of your total pay check.
Example: basic + DA ₹40,000 and other allowances ₹60,000 (total ₹1,00,000). Allowances are 60% of pay, so ₹60,000 − ₹50,000 = ₹10,000 is added and the gratuity wage becomes ₹50,000. For 10 years: ₹50,000 × 15 ÷ 26 × 10 = ₹2,88,462, against ₹40,000 × 15 ÷ 26 × 10 = ₹2,30,769 on basic + DA alone.
Central government employees
Central government staff get gratuity under the CCS (Pension) Rules or, for NPS members, the CCS (Payment of Gratuity under NPS) Rules, not the Gratuity Act check:
- Retirement gratuity (after 5 years' qualifying service): ¼ of basic + DA for each completed six months, at most 16.5 × basic + DA.
- Death gratuity: 2 × basic + DA under 1 year; 6 × from 1 to under 5 years; 12 × from 5 to under 11 years; 20 × from 11 to under 20 years; from 20 years, ½ × for each completed six months, at most 33 ×.
- Ceiling ₹25 lakh from 1 January 2024, when DA reached 50%.
- Resigning from government service usually means you lose past service, so no gratuity.
- State governments and public sector companies have their own rules.
Tax on gratuity
| You are | Tax-free part |
|---|---|
| Government employee | All of it |
| Covered by the gratuity law | Smallest of: gratuity paid, 15/26 formula amount, ₹20 lakh |
| Not covered | Smallest of: gratuity paid, 15/30 × 10-month average × completed years, ₹20 lakh |
| Nominee or heirs after death | Generally not taxed as salary check |
The ₹20 lakh is a lifetime limit across all your employers: tax-free gratuity from earlier jobs uses it up. The taxable part is added to your salary and taxed at your slab rate (the estimate here adds 4% cess but no surcharge). If it pushes you into a higher slab, relief under the old Act's section 89 may lower the tax check. This was section 10(10) of the Income-tax Act 1961; the Income-tax Act 2025 carries the same exemption from 1 April 2026 check.
Good to know
- Your employer must pay within 30 days of it becoming due, or pay interest on the delay.
- Gratuity uses basic + DA only (unless the Code's 50% rule applies). HRA, special allowance and bonus don't count.
- Your employer can pay more than the formula or the ₹20 lakh cap. Enter what they pay under "Gratuity actually paid" to see the tax.
Rules as set out in the Payment of Gratuity Act 1972, the Code on Social Security 2020, the CCS rules and the Income-tax Act, not yet re-checked on the official pages. Items marked "check" could change or are worth confirming with your employer or a tax adviser. This calculator gives an estimate, not legal or tax advice.
Common questions
How is gratuity calculated in India?
If your employer is covered by the gratuity law, gratuity = last monthly basic pay + DA × 15 ÷ 26 × years of service. A part year of more than 6 months counts as a full year. So ₹50,000 a month for 8 years 7 months gives ₹50,000 × 15 ÷ 26 × 9 = ₹2,59,615. The most the law makes an employer pay is ₹20 lakh.
Do I get gratuity after 4 years and 240 days?
The law asks for 5 years of continuous service, except on death or disablement. Some High Courts have ruled that working 240 days in your fifth year (190 days where the workplace runs less than 6 days a week, or below ground in a mine) counts as a full fifth year. Not every employer accepts this, so ask your HR team first.
Is gratuity taxable?
For government employees it is fully tax-free. For everyone else, the tax-free part is the smallest of: the gratuity you get, the amount worked out by the formula, and ₹20 lakh (a lifetime limit across all your jobs). Anything above that is added to your salary income and taxed at your slab rate.
What changed for gratuity under the new Labour Codes?
The Code on Social Security, 2020 replaced the Payment of Gratuity Act from 21 November 2025 (as reported). The 15/26 formula stays. Fixed-term employees now get gratuity after just 1 year. And if allowances outside basic + DA are more than half of your pay, the extra is added to the wage used for gratuity, which can raise it.
What is the difference between the 15/26 and 15/30 formulas?
Employers covered by the gratuity law use 15/26: a month is taken as 26 working days, and a part year over 6 months counts. If your employer is not covered, the tax-free limit uses 15/30 with the average basic + DA of your last 10 months, and only completed years count. With the same pay, 15/30 gives a smaller amount.
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