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GRATUITY / INDIA

Gratuity calculator

Work out your gratuity under the Code on Social Security: 15 days' wages for every year of service at last drawn basic + DA, after 5 years (1 year for fixed-term staff).

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Your details

01Service

More than 6 months counts as a full year.

Employment

Gratuity payable

₹3,17,308

₹50,000 × 15/26 × 11 years

Years counted
11
15 days' wages
₹28,846
Eligible
Yes
  • Code on Social Security, 2020, section 53 (in force from 21 November 2025): 15 days' wages for every completed year of service, and for a final part year of more than 6 months. For monthly-paid staff, 15 days' wages = monthly wages × 15 ÷ 26 = ₹28,846.
  • Wages are basic pay + dearness allowance + retaining allowance. If allowances are more than half of your total pay, the excess counts as wages too, so gratuity can be higher than this.
  • Gratuity is payable after 5 years of continuous service, or after 1 year for fixed-term employees, and on death or disablement whatever the service.
  • The maximum is ₹20,00,000. Gratuity is tax-free up to that limit for private-sector employees under the Income-tax Act, 2025 as far as we can confirm; check your Form 16.

Gratuity payable: ₹3,17,308 ₹50,000 × 15/26 × 11 years

How gratuity is worked out
Show the breakdownAmount
Last drawn basic + DA per month₹50,000
15 days' wages (× 15 ÷ 26)₹28,846
Years counted (service 10 years 7 months)11
Formula amount₹3,17,308
Gratuity payable₹3,17,308

₹3,17,308

₹50,000 × 15/26 × 11 years

How it's calculated

Gratuity is a lump sum your employer pays when you leave after long service. Since 21 November 2025 it is governed by section 53 of the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972 and kept its formula.Ministry of Labour and Employment You earn 15 days' wages for every completed year of service, at your last drawn wages, and a final part year of more than six months counts as a full year.

The formula

Gratuity = last drawn monthly wages × 15 ÷ 26 × years of service

  • Wages = basic pay + dearness allowance (+ retaining allowance).
  • 15 ÷ 26 turns a month's wages into 15 days' wages, counting 26 working days in a month.
  • Years of service = completed years, plus one if the remaining part year is more than six months.

Eligibility: five years of continuous service, or one year for fixed-term employees, who are paid pro rata. The five-year condition does not apply on death or disablement. Maximum: ₹20 lakh, the limit notified by the Government.Ministry of Labour and Employment

Worked example

With last drawn basic + DA of ₹50,000 a month and 10 years 7 months of service, 11 years count. Gratuity is ₹3,17,308.

₹50,000 a month, 10 years 7 monthsGRATUITY / 15/26 / INDIA
LineAmount
Last drawn basic + DA per month₹50,000
15 days' wages (× 15 ÷ 26)₹28,846
Years counted (service 10 years 7 months)11
Formula amount₹3,17,308
Gratuity payable₹3,17,308

With 10 years 6 months, only 10 years count and gratuity is ₹2,88,462. A fixed-term employee on ₹50,000 who leaves after 2 years receives ₹57,692.

Assumptions and limitations

  • Wages may be higher than basic + DA. Under the Labour Codes, if allowances are more than half of your total pay, the excess counts as wages for gratuity. Enter the higher figure if that applies to you.
  • Statutory gratuity only. Employers can pay more under their own schemes.
  • Tax: statutory gratuity is tax-free up to the ₹20 lakh limit; any excess is taxed as salary. We could not find a notification under the Income-tax Act, 2025 changing that limit.
  • Continuous service includes authorised leave and some breaks; ask your employer how your service is counted.
FAQ

Questions people ask

What is the gratuity formula?

Gratuity = last drawn monthly wages × 15 ÷ 26 × years of service. Wages means basic pay plus dearness allowance. The 15 ÷ 26 converts monthly pay into 15 days' wages, counting 26 working days in a month. A final part year of more than six months counts as a full year, so 10 years and 7 months counts as 11 years.

Who is eligible for gratuity?

Employees with at least five years of continuous service with the employer, when they resign, retire or are terminated. The five-year condition does not apply on death or disablement. Under the Code on Social Security, 2020, in force from 21 November 2025, fixed-term employees qualify after one year and receive gratuity pro rata for their service.

What is the maximum gratuity?

The Government notifies the limit, which is ₹20 lakh. If the formula gives more, gratuity under the law is capped at ₹20 lakh, although an employer can pay more under its own scheme. Any amount above the tax-free limit is taxable as salary in the year you receive it.

Did the new labour codes change gratuity?

Yes. The Code on Social Security replaced the Payment of Gratuity Act from 21 November 2025. The formula is the same, but fixed-term employees now qualify after one year, and if allowances exceed half of your total pay the excess counts as wages, which can raise the gratuity for people with a low basic salary.

When is gratuity paid?

The employer must pay gratuity within 30 days of it becoming payable, usually when you leave. If it is paid late, the employer owes simple interest on it. Some employers fund gratuity through an insurance scheme, but the amount due to you does not depend on how the employer funds it.

Sources

  1. Ministry of Labour and EmploymentCode on Social Security, 2020 (section 53: gratuity) · retrieved 2026-10-20
  2. Ministry of Labour and EmploymentFAQs on the Labour Codes (30 December 2025) · retrieved 2026-10-20
  3. Gazette of IndiaIncome-tax Act, 2025 (No. 30 of 2025) · retrieved 2026-10-20

Written by Reviewed by TODO Reviewer NameLast verified Updated

How every figure is checked: methodology.