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Retirement Planning · Pensions & Benefits

Gratuity Calculator (India)

Calculate the gratuity you're entitled to when you retire, resign or your fixed-term contract ends — under the Code on Social Security, 2020 (formerly the Payment of Gratuity Act) — with eligibility checks, the 50 % wage rule, the ₹20 lakh ceiling and how much is tax-free.

Also listed inSalary & TaxFinance & Investment

Your inputs

Quick start — try a typical case

₹ 60 thousand

Gross monthly pay. If allowances are more than half of it, the excess counts as wages for gratuity (Code on Social Security). Leave 0 to skip.

years
months

Your result Live

Gratuity Payable

₹4,50,000

₹60,000 × 15 ÷ 26 × 13 years

Years Counted
13 (12 years 7 months rounded up)
Wages Used
₹60,000
Gratuity per Year of Service
₹34,615
Tax-free Portion
₹4,50,000 (up to ₹20,00,000 for others)

The employer must pay within 30 days of it becoming due; delayed gratuity carries simple interest.

How this is calculated

Gratuity = Last drawn wages × 15 ÷ 26 × Years of service (capped at ₹20 lakh)

Wages
Basic + DA; if allowances exceed 50 % of total pay, the excess is added
26
Working days in a month — 15 days' wages for each year
Years
Completed years, plus one if the remaining part is more than 6 months

Gratuity is a lump sum the employer pays as thanks for long service: 15 days' wages for every year worked. Permanent employees qualify after 5 years of continuous service; fixed-term employees after 1 year under the Code on Social Security, 2020; and there is no minimum on death or disablement. The Code also counts allowances above half of total pay as wages, which can raise gratuity for people with a low basic.

Assumptions & sources

  • Statutory ceiling ₹20,00,000 (Payment of Gratuity Act ceiling, carried into the Code on Social Security, 2020 (in force from 21 Nov 2025)); employers may pay more by contract, and the excess is taxable for non-government employees.
  • Wages are the last drawn monthly basic + DA (piece-rated and seasonal workers have different rules).
  • Tax exemption shown for the common cases; it is per lifetime across employers for non-government employees.
  1. 1Code on Social Security, 2020 — Chapter V (Gratuity) — Ministry of Labour & Employment
  2. 2The Payment of Gratuity Act, 1972 (subsumed into the Code on Social Security, 2020) — Government of India

Calculator ID OPS-HR-GRATUITY-IN-001 · version 1.0.0

Common questions

How is gratuity calculated?

Last drawn basic + DA × 15 ÷ 26 × years of service. For example ₹60,000 × 15 ÷ 26 × 13 years = ₹4,50,000. Service of 12 years 7 months counts as 13 years, because more than six months rounds up.

Who is eligible?

Permanent employees after 5 years of continuous service; fixed-term employees after 1 year (from 21 November 2025); anyone on death or disablement, regardless of service.

Is gratuity taxable?

Fully tax-free for government employees. For others, up to ₹20 lakh over a lifetime is tax-free; anything above is taxed as salary.

What changed under the new labour codes?

Fixed-term employees became eligible after 1 year, and allowances above half of total pay now count as wages, which raises gratuity for people whose basic pay is a small part of their salary.