Gratuity is fifteen days' wages per year
For every year of service the employer pays fifteen days' wages at the rate you last drew — monthly wages ÷ 26 × 15. Ten years at ₹50,000 a month is ₹2,88,462.
Free gratuity calculator
Gratuity Calculator
Enter your last drawn wages and your joining and leaving dates — and get the gratuity payable, the amount before the ₹20 lakh ceiling, the exact service counted and the tax-exempt split, with the working shown.
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₹2,88,462 gratuity payable
On ₹50,000 a month · 10 years, 0 months and 0 days of service
₹2,88,462 before the ceiling
Below the ₹20 lakh ceiling — the full amount is payable
₹2,88,462 tax-exempt
Taxable ₹0 — the whole amount is exempt
A statutory figure at the wages you enter, not legal advice. This tool applies the Code on Social Security, 2020 (in force 21 November 2025) — it is not legal advice. The figure is the statutory amount; your settlement letter decides what is actually paid. Check the rules table below before you rely on it.
Calculate gratuity
₹50,000 a month for 10 yearsExample figures are filled in. Replace them with your own numbers.
YOUR ANSWER
WORKING SHOWN BELOW
Your answer
₹2,88,462
GRATUITY PAYABLE
₹2,88,462
BEFORE THE CEILING
₹2,88,462
TAX-EXEMPT
Your answer at a glance
₹50,000 a month · 10 years counted → gratuity ₹2,88,462. Tax-exempt ₹2,88,462.
Service: 10 years, 0 months and 0 days from 1 January 2016 to 1 January 2026. Counted years: 10.
₹50,000 × 15 × 10 ÷ 26 = ₹2,88,462.
Wage base ₹50,000 (basic + DA). Divisor 26 — covered employer.
Below the ₹20 lakh ceiling — the full ₹2,88,462 is payable. Tax-exempt ₹2,88,462 · taxable ₹0.
The figure is the statutory amount under the Code on Social Security, 2020. Your settlement letter decides what is actually paid — and the tax split is shown on the before-cap figure, because that is what the ₹20 lakh exemption limit bites on.
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Your gratuity as service grows
Gratuity at 5, 10, 15, 20 and 25 years
Gratuity at ₹50,000 a month (÷ 26, covered employer) — the same wage at 5, 10, 15, 20 and 25 years.
| Years of service | Before the ceiling | Payable | Ceiling bites? |
|---|---|---|---|
| 5 years | ₹1,44,231 | ₹1,44,231 | No |
| 10 years | ₹2,88,462 | ₹2,88,462 | No |
| 15 years | ₹4,32,692 | ₹4,32,692 | No |
| 20 years | ₹5,76,923 | ₹5,76,923 | No |
| 25 years | ₹7,21,154 | ₹7,21,154 | No |
Understand the result
What does a gratuity calculator do?
Gratuity is a lump sum your employer pays for long service — fifteen days' wages for every year you worked there. This calculator works out the amount from your last drawn monthly wages (basic + dearness allowance) and your exact service, applies the 5-year eligibility rule, the part-year rounding, the ₹20 lakh ceiling and the 50% wage rule, and splits the figure into the tax-exempt and taxable parts.
A part-year over six months counts as a full year
For permanent staff, a part-year over 6 months in the last year counts as a full year — 10 years 7 months counts as 11. Exactly 6 months does not round up. Fixed-term staff are paid pro rata on exact service instead.
The most an employer must pay
The statutory ceiling is ₹20,00,000. If the formula gives more, the payment is capped — the calculator shows the before-cap figure so you can see what the ceiling cost you.
How it works
From your wages and dates to a gratuity figure
Enter your last drawn wages first — the dates and the employment type are already filled in with the usual figures — then read the gratuity, the cap and the tax split.
Enter your last drawn wages
Basic + dearness allowance only — from ₹1,000 to ₹10,00,000 a month. Not your gross salary or CTC; entering those inflates the figure. Add your total monthly pay below it if you want the 50% rule checked.
Enter your joining and leaving dates
The dates on your appointment letter and your relieving letter. The calculator counts the exact service — years, months and days — between them.
Choose the employment type and coverage
Permanent or fixed-term, and whether your employer is covered (10 or more employees). Fixed-term staff qualify after 1 year, paid pro rata; employers outside the Code commonly use the ÷ 30 formula.
Read the gratuity, the cap and the tax split
The answer appears as you type — gratuity payable, the amount before the ₹20 lakh ceiling, the exact service counted and the tax-exempt split — with the step-by-step working and the growth table underneath.
The calculation, explained
How gratuity is calculated
Gratuity = last drawn monthly wages × 15 × years of service ÷ 26, for employers covered by the Code (10 or more employees). A part-year over 6 months counts as a full year for permanent staff; fixed-term staff are paid pro rata on exact service. Employers outside the Code who pay voluntarily commonly use ÷ 30 on completed years. The most an employer must pay is ₹20,00,000.
1. The 6-month rule adds a year
3,17,308 at 11 years · 28,846 more than 10 years
₹50,000 a month over 10 years 7 months counts as 11 years: ₹50,000 × 15 × 11 ÷ 26 = ₹3,17,308, against ₹2,88,462 for 10 years exactly.
2. The ceiling bites at high wages
21,63,462 before the ceiling · 20,00,000 payable
₹1,50,000 a month for 25 years gives ₹21,63,462 before the ceiling — ₹1,63,462 above it, taxable if the employer pays it.
3. Fixed-term: exact pro-rata
34,615 for 1½ years
₹40,000 × 15 × 1.5 ÷ 26 = ₹34,615. A fixed-term employee qualifies after 1 year — no 5-year wait, and no rounding of the part-year.
The 6-month rule is where most people lose money
On the ₹50,000 sample, 10 years 7 months counts as 11 years — ₹3,17,308 instead of ₹2,88,462, a difference of ₹28,846 for one extra month of service. But 10 years 6 months counts as 10 years exactly: the part-year must be over 6 months to round up. Check your leaving date against the 6-month line before you accept a settlement figure.
Worked examples
Five cases, five gratuity figures
One example for each everyday case, including one that hits the ceiling and one fixed-term case. Select any example to load it into the calculator and check the working for yourself.
₹50,000 a month for 10 years pays ₹2,88,462
₹50,000 of basic + DA over 10 years of service; the whole ₹2,88,462 is tax-exempt, well below the ₹20 lakh ceiling — and it is the same figure the ranking gratuity calculators give.
₹50,000 · 10 years → gratuity ₹2,88,462
₹60,000 a month for 10 years pays ₹3,46,154
₹60,000 of basic + DA over 10 years; ₹3,46,154 in full, all of it tax-exempt. The same figure the live calculator on PaisaCalc gives for ₹60,000 over 10 years.
₹60,000 · 10 years → gratuity ₹3,46,154
₹1,00,000 a month for 20 years pays ₹11,53,846
₹1,00,000 of basic + DA over 20 years; ₹11,53,846, all of it tax-exempt. Twenty years pays exactly twice the ten-year figure at the same wage.
₹1,00,000 · 20 years → gratuity ₹11,53,846
₹1,50,000 a month for 25 years hits the ₹20 lakh ceiling
The formula gives ₹21,63,462 before the ceiling — so the employer must pay ₹20,00,000, and the ₹1,63,462 above the ceiling is taxable if the employer pays it.
₹1,50,000 · 25 years → gratuity ₹20,00,000 (before cap ₹21,63,462)
Fixed-term: ₹40,000 a month for 1½ years pays ₹34,615
A fixed-term employee qualifies after 1 year, paid pro rata on exact service: 1 year 6 months is 1.5 years, so ₹40,000 × 15 × 1.5 ÷ 26 = ₹34,615 — no 5-year wait.
₹40,000 · 1 year, 6 months and 0 days (fixed-term) → gratuity ₹34,615
Gratuity rules at a glance
Gratuity rules at a glance
The rules that decide what your gratuity actually is: the formula, who qualifies, the ceiling, what counts as wages, the payment deadline and the tax treatment. Every rule here is from the Code on Social Security, 2020, the Ministry of Labour & Employment FAQs or the CBDT notification — never from a blog or a competitor.
| Figure | Rule | What it means |
|---|---|---|
| 15 ÷ 26 | The formula — covered employers | Gratuity = (last drawn monthly wages × 15 × years of service) ÷ 26. Monthly-rated staff: monthly wages ÷ 26 × 15. The 15 is fifteen days' wages for every year of service; the 26 is the working days in a month. |
| 15 ÷ 30 | Not covered — the commonly used formula | Employers outside the Act who pay gratuity voluntarily commonly use the average of the last 10 months' wages × 15 ÷ 30. Only completed years count, and the ₹20 lakh ceiling is not a statutory cap for them. |
| 5 years | Eligibility — permanent employees | Gratuity is payable after 5 years of continuous service with the same employer (Code on Social Security, 2020, s.53(1)). A part-year over 6 months counts as a full year. |
| 1 year | Eligibility — fixed-term employees | The 5-year rule is waived where employment ends on expiry of the fixed-term contract. Ministry FAQs say a fixed-term employee is eligible after 1 year of service under the contract, paid pro rata on exact service. |
| ₹20,00,000 | The ceiling | The most an employer must pay is ₹20 lakh (s.53(3), as notified; the Labour Ministry confirmed in December 2025 it remains ₹20 lakh). The calculator shows the before-cap figure when the cap bites. |
| 50% rule | Wages — basic + DA, topped up | Wages are basic + dearness allowance (plus retaining allowance where applicable). If basic + DA is below 50% of total monthly pay, 50% of total pay is the wage base (s.2(88)). |
| 30 days | Payment deadline | Gratuity must be paid within 30 days of becoming payable (s.56). If payment is delayed, interest is payable. |
| ₹20 lakh, lifetime | Tax — exempt up to ₹20 lakh | Gratuity up to ₹20 lakh is exempt for private-sector employees — a lifetime limit across all employers (CBDT Notification S.O. 1213(E), 8 March 2018). Government employees' gratuity is fully exempt. |
The formula is arithmetic — the wage base, the years counted and the divisor decide it. The ceiling and the lifetime tax exemption are what most people get wrong.
Common mistakes
Four ways to get gratuity wrong
The formula is short, but four readings trip people up. Each one can cost tens of thousands on a settlement.
Using the whole pay packet as wages
Only basic + dearness allowance counts — not HRA, bonus or the rest of your CTC. Entering a ₹1,00,000 CTC as wages doubles the figure. If your basic + DA is below half of your total pay, the 50% rule tops the wage base up to half of it — enter your total pay and let the calculator apply it.
Forgetting the 6-month rounding
For permanent staff a part-year over 6 months counts as a full year. On ₹50,000 a month, 10 years 7 months pays ₹3,17,308 — ₹28,846 more than 10 years exactly. Check your leaving date against the 6-month line before you accept a settlement figure.
Missing the top-up on a low basic
If your basic + DA is below half of your total monthly pay, 50% of your total pay is the wage base. On ₹35,000 basic + DA with ₹1,00,000 total pay, the base is ₹50,000 — and the gratuity is ₹2,88,462, not ₹2,01,923.
Treating the ₹20 lakh exemption as per employer
The ₹20 lakh tax exemption is a lifetime limit across all employers. If you already took ₹15 lakh tax-free gratuity from a previous employer, only ₹5 lakh of the next gratuity is exempt — keep the old settlement letters.
Your questions, answered
Gratuity calculator FAQs
How is gratuity calculated in India?
With the statutory formula: gratuity = (last drawn monthly wages × 15 × years of service) ÷ 26, for employers covered by the Code on Social Security, 2020. Monthly-rated staff: monthly wages ÷ 26 × 15. For ₹50,000 of basic + DA over 10 years: ₹50,000 × 15 × 10 ÷ 26 = ₹2,88,462. The 15 is fifteen days' wages for every year of service, and the 26 is the working days in a month. Employers outside the Code who pay voluntarily commonly use ÷ 30 instead.
How many years of service do I need for gratuity?
Five years of continuous service with the same employer, for permanent staff (Code on Social Security, 2020, s.53(1)). A part-year over 6 months counts as a full year, so 5 years 7 months counts as 6. Fixed-term staff qualify after 1 year of service under the contract, paid pro rata. The 5-year rule is waived entirely if the service ends through death or disablement.
What salary counts as wages for gratuity?
Basic pay + dearness allowance, plus retaining allowance where it applies. HRA, bonus, overtime and other allowances are excluded — unless the 50% rule bites: if your basic + DA is below half of your total monthly pay, 50% of your total pay becomes the wage base (s.2(88)). Enter your total monthly pay in the calculator and it applies the rule and shows the adjustment. Never enter your gross salary or CTC as wages — it inflates the figure.
What is the maximum gratuity I can get?
₹20,00,000 is the most an employer must pay (s.53(3), as notified; the Labour Ministry confirmed in December 2025 it remains ₹20 lakh). If the formula gives more, the payment is capped and the calculator shows the before-cap figure — on ₹1,50,000 a month for 25 years the formula gives ₹21,63,462, so ₹20,00,000 is payable. An employer can pay more than the ceiling voluntarily, but the excess is taxable.
Is gratuity taxable?
Up to ₹20 lakh is exempt for private-sector employees — and that is a lifetime limit across all employers, not per employer (CBDT Notification S.O. 1213(E), 8 March 2018). Government employees' gratuity is fully exempt. Anything above the ₹20 lakh exemption is taxed as salary. This calculator shows the split on the before-cap figure, because that is what the exemption limit bites on.
How is gratuity calculated for fixed-term employees?
A fixed-term employee is eligible after 1 year of service under the contract, paid pro rata — the 5-year rule does not apply (Code on Social Security, 2020; Ministry of Labour & Employment FAQs). This calculator works it out on exact service: years + months ÷ 12 + days ÷ 365. For ₹40,000 a month over 1 year 6 months: ₹40,000 × 15 × 1.5 ÷ 26 = ₹34,615. One honest limit: the FAQs do not spell out how a part-year is treated for fixed-term staff, so this calculator uses exact pro-rata and says so — check your contract if it states a different treatment.
My employer has fewer than 10 employees. Do I get gratuity?
The Code covers establishments with 10 or more employees, so a smaller employer is not legally bound to pay. Many still pay gratuity voluntarily, and the formula commonly used is the average of the last 10 months' wages × 15 ÷ 30, on completed years only. Switch the covered toggle off and the calculator uses that formula — it is labelled as the commonly used formula, not a statutory one.
When must my employer pay my gratuity?
Within 30 days of it becoming payable (s.56). Claim it with Form I within 30 days of leaving; if the employer delays without a valid reason, interest is payable. If the employer refuses or underpays, you can appeal to the Controlling Authority (the Labour Commissioner) with Form N.
Does this calculator send my numbers anywhere?
No. Every calculation runs entirely on this page — nothing is sent to a server, nothing is stored, and reloading the page clears your recent checks.
About the method
This page uses the statutory gratuity formula: gratuity = last drawn monthly wages × 15 × years of service ÷ 26, for employers covered by the Code on Social Security, 2020 (10 or more employees). Monthly-rated staff: monthly wages ÷ 26 × 15. For permanent staff a part-year over 6 months counts as a full year (s.53(2)); fixed-term staff are paid pro rata on exact service (years + months ÷ 12 + days ÷ 365). Employers outside the Code who pay voluntarily commonly use the average of the last 10 months' wages × 15 ÷ 30 on completed years only. The most an employer must pay is ₹20,00,000 (s.53(3), as notified). The tax split is shown on the before-cap figure: exempt up to ₹20 lakh, a lifetime limit across all employers (CBDT Notification S.O. 1213(E), 8 March 2018); government employees' gratuity is fully exempt. Service is counted as a calendar difference — years, months and days between the joining and leaving dates.
Rules checked 12 November 2026: the Code on Social Security, 2020, s.53 (formula, 5-year rule, part-year rule, ₹20 lakh ceiling), s.56 (30-day payment deadline) and s.2(88) (the 50% wage rule), in force 21 November 2025, replacing the Payment of Gratuity Act, 1972; the Ministry of Labour & Employment FAQs of 30 December 2025 and 16 March 2026 (fixed-term eligibility after 1 year, the ₹20 lakh ceiling, the 50% rule); CBDT Notification S.O. 1213(E) of 8 March 2018 (the ₹20 lakh exemption, raised from ₹10 lakh). Cross-checked against the ranking gratuity calculators: ₹50,000 a month for 10 years gives ₹2,88,462 — and the growth table (5 years ₹1,44,231; 15 years ₹4,32,692; 20 years ₹5,76,923; 25 years ₹7,21,154) and the 10 years 7 months figure of ₹3,17,308 — on cleartaxgratuitycalculator.com; ₹60,000 a month for 10 years gives ₹3,46,154, and ₹1,50,000 a month for 25 years gives ₹21,63,462 before the ceiling with ₹1,63,462 taxable, on paisacalc.net.in. ClearTax and Upstox state the same 15/26 formula, the 5-year rule, the 1-year fixed-term rule and the ₹20 lakh ceiling. Two honest limits: the Ministry FAQs do not spell out how a part-year is treated for fixed-term staff, so this calculator uses exact pro-rata and says so; and the ÷ 30 formula for employers outside the Code is the formula commonly used, not a statutory one. The 4-year-240-day reading some guides cite was not verified from an official source in this run, so it is not used on this page.
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