Gratuity calculator (India)
This gratuity calculator works out the gratuity an employee in India receives on leaving a job, using the formula of the Code on Social Security, 2020 that applies since 21 November 2025: last drawn monthly wages × 15 ÷ 26 for each completed year of service, with a part year of more than six months counted as a full year.
Example: Last drawn monthly wages (basic pay + dearness allowance) 50,000 ₹ · Completed years of service 10 years · Extra months 7 months · Type of employment: permanent employee (gratuity after 5 years) → Gratuity payable: ₹317,308.00. Source: Ministry of Labour and Employment – FAQs on Labour Codes (30.12.2025): how gratuity is calculated, maximum currently ₹20 lakh. Updated: .
How it is calculated
Gratuity = last drawn monthly wages × 15 ÷ 26 × years of service. 15 days’ wages are paid for each completed year, and a monthly wage is turned into 15 days’ wages by dividing it by 26 working days and multiplying by 15. With ₹50,000 a month and 10 years 7 months of service, 11 years count: 50,000 × 15 ÷ 26 × 11 = ₹3,17,308.
How to use the gratuity calculator
- Enter your last drawn monthly wages: basic pay plus dearness allowance.
- Enter your completed years and the extra months of service.
- Choose permanent or fixed-term employment.
- Read the gratuity, the years counted and the working.
Rules for gratuity under the Code on Social Security
| Rule | What applies |
|---|---|
| Rate | 15 days’ wages for every completed year of service |
| Monthly-rated employees | monthly wages ÷ 26 × 15 |
| Part year | more than 6 months counts as a full year |
| Eligibility | 5 years of continuous service; fixed-term employees after 1 year; no minimum on death or disablement |
| Maximum | as notified by the Central Government – currently ₹20 lakh |
| Seasonal establishments | 7 days’ wages per season |
Examples
- ₹30,000 a month, 5 years 4 months: 5 years count → 30,000 × 15 ÷ 26 × 5 = ₹86,538.
- ₹80,000 a month, 20 years 9 months: 21 years count → ₹9,69,231.
- ₹2,00,000 a month, 30 years: ₹34,61,538 by the formula, paid up to the ₹20 lakh cap.
What changed with the Labour Codes
The four Labour Codes took effect on 21 November 2025 and replaced the Payment of Gratuity Act, 1972 among other laws. The formula of 15 days’ wages stayed the same. Two things changed: fixed-term employees now become eligible after one year instead of five, and the new uniform definition of wages means a low basic salary with large allowances no longer shrinks gratuity – allowances above half of total pay count as wages. The Ministry of Labour and Employment says the revised calculation applies from 21 November 2025.
Planning what to do with the payout? The EMI calculator shows loan instalments, and the retirement calculator helps you plan savings. Working out exact service? Use the years of service calculator.
Frequently asked questions
What is the formula for gratuity?
Last drawn monthly wages (basic + DA) × 15 ÷ 26 × completed years of service. A part year of more than 6 months counts as a full year.
How much gratuity for 5 years with a salary of ₹25,000?
25,000 × 15 ÷ 26 × 5 = ₹72,115.
Is gratuity paid after 4 years 7 months?
For a permanent employee the condition is 5 years of continuous service; how a final part year counts towards the five years can depend on your case, so check with your employer or a labour lawyer. Fixed-term employees qualify after one year.
What is the maximum gratuity?
The ceiling is notified by the Central Government and is currently ₹20 lakh.
Why is the salary divided by 26?
The Code itself says so: for a monthly-rated employee, 15 days’ wages are the monthly wages divided by 26 and multiplied by 15 – commonly explained as 26 working days in a month.
Do fixed-term employees get gratuity?
Yes. Under the Code on Social Security, a fixed-term employee is eligible after one year of service under the contract.
Is gratuity taxable?
Gratuity received by employees is exempt from income tax up to a limit set in tax law; any amount above it is taxed as salary. Check the current rules or ask a tax adviser.
Sources and legal basis
- Ministry of Labour and Employment – FAQs on Labour Codes (30.12.2025): how gratuity is calculated, maximum currently ₹20 lakh
- Ministry of Labour and Employment – Additional FAQs on Labour Codes (16.03.2026): gratuity from 21.11.2025, fixed-term employees after one year
- The Code on Social Security, 2020 – section 53 (payment of gratuity; monthly wages divided by 26 and multiplied by 15)
- PIB – Government makes the four Labour Codes effective (21 November 2025)
As of: · Editorial policy
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