Gratuity Calculator
Calculate your gratuity in seconds using the 15/26 formula under the Code on Social Security, 2020 — with the service rules for permanent and fixed-term employees and the ₹20 lakh cap built in.
How to use this gratuity calculator
- Choose your employment type — permanent or fixed-term.
- Enter your last drawn monthly wages — basic pay plus dearness allowance (DA), not your full CTC. If your other allowances are more than half your total pay, add the part above half.
- Enter your completed years of service, and any extra months (more than 6 months in the final year counts as a full year).
- The calculator applies the 15/26 formula under the Code on Social Security, 2020 and shows your estimated gratuity instantly.
The gratuity formula in India
Gratuity is now governed by the Code on Social Security, 2020, which replaced the Payment of Gratuity Act 1972 from 21 November 2025. The formula did not change. For establishments with 10 or more employees, it is:
| Component | Value |
|---|---|
| Gratuity | (15 × last wages × years) ÷ 26 |
| Wages | Basic + DA + retaining allowance |
| Allowances above 50% of pay | Added to wages |
| Rounding | More than 6 months = 1 full year |
| Maximum payable | ₹20,00,000 |
| Tax-free limit (lifetime) | ₹20,00,000 |
Worked example
Ravi, a permanent employee, earns wages of ₹60,000 (basic + DA) and has worked 12 years and 7 months.
Years counted = 13 (7 months rounds up). Gratuity = (15 × 60,000 × 13) ÷ 26 = ₹4,50,000, fully tax-free as it is under ₹20 lakh.
Who is eligible for gratuity?
Permanent employees qualify after five years of continuous service. Fixed-term employees qualify after one year, with gratuity paid pro rata for the time served. The service condition is waived if employment ends because of death or disablement. If your employer wrongly refuses gratuity, you can raise a claim with the labour authorities — and a lawyer can help.
What counts as wages
Wages means basic pay, dearness allowance and any retaining allowance. If the allowances left out of wages add up to more than 50% of your total pay, the amount above 50% is added back to wages before gratuity is worked out.
Frequently asked questions
How is gratuity calculated in India?
Under the Code on Social Security, 2020, gratuity = (15 × last drawn monthly wages × completed years of service) ÷ 26. Wages means basic pay plus dearness allowance and any retaining allowance; if your other allowances are more than 50% of total pay, the excess is added to wages. More than six months in the final year counts as a full year.
What does 15/26 mean in the gratuity formula?
It treats gratuity as 15 days of wages for every completed year. A month is taken as 26 working days, so 15/26 of your monthly wages is roughly 15 days' pay — multiplied by your years of service.
How much gratuity will I get for 10 years?
At last drawn wages (basic + DA) of ₹50,000, ten years gives (15 × 50,000 × 10) ÷ 26 = ₹2,88,462. Change the numbers in the calculator above for your own figure.
Can I get gratuity for less than 5 years?
Permanent employees usually need five years of continuous service. Fixed-term employees qualify after one year, with gratuity paid pro rata. The service condition does not apply if employment ends because of death or disablement.
Did the gratuity law change?
Yes. The Code on Social Security, 2020 replaced the Payment of Gratuity Act 1972 from 21 November 2025. The 15/26 formula and the ₹20 lakh ceiling are the same. For this calculator, the changes that matter are gratuity for fixed-term employees after one year and the rule that adds allowances above 50% of pay to wages.
Is gratuity taxable?
Gratuity is tax-free up to ₹20,00,000 (a lifetime limit) under the Income-tax Act 2025 (formerly section 10(10)); any amount above that is taxable. Government employees get full exemption.
What is the maximum gratuity payable?
Gratuity payable under the Code is capped at ₹20 lakh, which is also the tax-free limit. An employer can choose to pay more, but the excess is taxable in your hands.
Do I get gratuity if I resign?
Yes. Gratuity is payable on resignation, retirement or the end of employment, as long as you meet the service condition — five years for permanent employees, one year for fixed-term employees.
Is gratuity part of CTC?
Many employers show a gratuity provision inside your CTC, but you only actually receive it when you leave after meeting the service condition. It is not part of your monthly take-home pay.