Gratuity Calculator (India)

Since 21 November 2025, gratuity comes from Chapter V of the Code on Social Security, 2020. It replaced the Payment of Gratuity Act, 1972, which applied until then. Under section 53(1) you get gratuity when your job ends — on retirement, resignation, reaching retirement age, death or disablement — after at least five years of continuous service. The Code covers every factory, mine, oilfield, plantation, port and railway company, and every shop or establishment that had ten or more employees on any day in the last twelve months. The five-year rule does not apply when the job ends because of death or disablement: then gratuity is paid however short the service, and on death it goes to the nominee or the heirs. It also does not apply when a fixed-term contract ends: the Government’s rules say a fixed-term employee qualifies after one year of service, and is paid for the time worked. For working journalists the five years become three. Employers outside the Code often pay gratuity anyway under the contract; then your contract or scheme decides the amount, not the Code.

Section 53(2) of the Code says the employer pays fifteen days’ wages, at the rate of the wages last drawn, for every completed year of service and for any part of a year over six months. For a monthly-paid employee, Explanation 3 to section 53 says those fifteen days’ wages are the last monthly wage divided by twenty-six and multiplied by fifteen — a month is treated as twenty-six working days. That gives the familiar formula: gratuity = last drawn monthly wages × 15 × years of service ÷ 26. For example ₹50,000 × 15 × 10 ÷ 26 = ₹2,88,462. This is the same rule the 1972 Act had in section 4. Two special cases: a worker in a seasonal establishment gets seven days’ wages for each season, and the Government may notify a number of days other than fifteen. The calculator above shows this exact line of arithmetic for whatever you enter, so you can check it against your employer’s figure digit by digit.

Enter your wages as the Code defines them in section 2(88): Basic pay plus dearness allowance (DA), plus any retaining allowance. House rent allowance, conveyance, overtime, commission, bonus and the employer’s PF contribution are left out at first. Then comes the 50% rule: if the left-out parts add up to more than half of your total pay, the part above half is added back to your wages. So if Basic + DA is less than half of your total pay, the figure to enter may be about half of your total pay instead. Exactly what counts as total pay is decided by your employer’s payroll, so ask them if you are not sure. Use the LAST DRAWN monthly figure — the one on your final payslip — not an average across the year, because the Code fixes the rate at the wages last drawn. Two exceptions worth knowing: for a piece-rated worker the daily wage is the average over the three months before the job ends (without overtime), and if you are not covered by the Code your employer may use the average of your last ten months’ salary instead, in which case type that average into the salary box.

This is the single most argued question in gratuity, and it is still not settled. On the plain wording, the six-month round-up in section 53(2) decides how much you are paid, not whether you have the five years — so four years and seven months is under five years and nothing is due. On the other side, the Madras High Court in Mettur Beardsell Ltd. v. Regional Labour Commissioner read the old Act’s continuous-service rule (section 2A) together with section 4(1) and held that an employee who works 240 days in the fifth year has completed that year, making four years plus 240 days enough. The Code repeats the same 240-day rule in section 54, so the same argument can still be made, but we have not found a court ruling on it under the Code yet. Many employers follow the Madras reading; the Supreme Court has not settled it for the whole country, so the outcome can depend on your employer and your state. This calculator does not take sides: it computes on the service you enter and simply flags when that service is under five years. Fixed-term employees are different: they need one year, not five.

Sources genuinely disagree here, and it is worth saying so plainly rather than pretending otherwise. For employees covered by the Code the rule is statutory and beyond argument: a part-year strictly in excess of six months counts as a full year. For employees outside the Code — where gratuity is contractual — some references apply the same round-up, while others credit only completed years and treat any part-year as ignored, because there is no statute to import the rule from. There is no single authority that settles it, since the answer really comes from the employer’s own scheme. Our "not covered" mode takes the narrower reading and credits completed years only, so it never overstates what you are owed. If your scheme document says otherwise, use the "covered" mode’s year count and substitute the 30-day divisor your scheme specifies.

The divisor 26 is written into the law: Explanation 3 to section 53 of the Code, like the old Act before it, converts a monthly wage to a daily wage by treating the month as twenty-six working days, on the reasoning that four weekly days of rest are not working days. That is why covered employees get monthly salary ÷ 26 × 15 per year, which is a little over half a month’s pay. Where the Code does not apply, the widely used contractual convention is half a month’s salary per completed year — monthly salary ÷ 30 × 15 — because there is no statutory daily-wage rule to follow. On the same salary and service the 26-day basis is worth about 15% more than the 30-day basis, which is why the covered-versus-not-covered table above matters more than it looks.

The ceiling is ₹20,00,000. Section 53(3) of the Code lets the Central Government notify the maximum. The ₹20 lakh figure was notified under the old Act with effect from 29 March 2018, after the Payment of Gratuity (Amendment) Act, 2018 replaced the old fixed limit of ₹10,00,000. Section 164(2) of the Code keeps notifications made under the old Act in force until they are replaced, and we have not found a new figure notified under the Code. Anything the formula produces above the ceiling is capped, and the calculator says so when it happens. An employer is free to pay more than the ceiling as an ex-gratia or contract amount — section 53(5) protects better terms in an agreement or contract — but the extra part loses the protection and the tax treatment that gratuity under the law gets.

From 1 April 2026 the Income-tax Act, 2025 replaced the Income-tax Act, 1961. Gratuity received in tax year 2026-27 or later is dealt with in section 19 of the new Act; the old section 10(10) still covers gratuity received before that. Government employees: gratuity under government pension rules is fully tax-free. Employees covered by the gratuity law: the tax-free part is the amount the statutory formula gives, up to the ₹20,00,000 ceiling. Everyone else: the tax-free part is the smallest of the gratuity actually received, half a month’s salary (averaged over the last ten months) for each completed year of service, and the notified limit, which has been ₹20,00,000; that limit is a lifetime total across all your employers, not a fresh limit at each job. Anything above the tax-free part is taxed as salary in the year you receive it. One loose end: as passed in 2025, the new tax Act’s table still names the old 1972 Act rather than the Code. Tax rules change more often than the gratuity formula does, so treat this as orientation and confirm the current position for your own return.

No. The calculator runs on your own device — the arithmetic happens in the page itself, so your salary and your length of service never leave your device, are never uploaded, stored or logged, and are not visible to us. Once the page has loaded you can even switch off your connection and it will keep working.