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Gratuity calculator

Check whether an employee is eligible and how much gratuity is payable under the Code on Social Security, 2020.

  • Runs on your device
  • Free, no sign-up
  • Reviewed 16 October 2026
Use the calculator How it works

Employee details

Basic + DA, plus any allowances above 50% of total pay.
Employment type
Employer covered by gratuity law?
Uncovered employers paying voluntarily often use 15 ÷ 30.

Gratuity payable

Death or disablement removes the minimum service rule. Tax exemption for private employees is capped at ₹20 lakh.

About this tool

Gratuity is a lump sum an employer pays when employment ends. The calculator applies the formula used by covered employers:

Last drawn wages × 15 ÷ 26 × completed years of service

  • Permanent staff qualify after 5 years of continuous service.
  • Fixed-term staff qualify after 1 year under the Code on Social Security, 2020.
  • In the final year, more than 6 months counts as a full year.
  • On death or disablement, the minimum service rule does not apply.

The law covers establishments with 10 or more employees. “Wages” follow the labour-code definition, so allowances above 50% of pay are added back.

How to fill it in

  1. Last drawn monthly wagesBasic + DA for the last month, plus any allowances above 50% of total pay. The salary calculator’s “Wages under the labour codes” line gives this figure.
  2. Years of service and extra monthsCompleted years, then the months worked in the final year (0–11).
  3. Employment typePermanent or fixed-term. This sets the minimum service needed.
  4. Employer covered by gratuity law?Choose Yes if you have 10 or more employees. Choose No if you pay gratuity voluntarily; many such employers use 15 ÷ 30.

Reading the results

Gratuity
The amount payable, or “Not yet eligible” if minimum service is not met.
Years counted
Completed years, plus one if the final year has more than 6 months.
Formula
The exact calculation, so you can show it to the employee.
Tax-free limit
Private-sector employees get income tax exemption on gratuity up to ₹20 lakh in their lifetime.
Example: An employee with last drawn wages of ₹25,000 leaves after 6 years and 7 months. The 7 months count as a full year, so 7 years are used: 25,000 × 15 ÷ 26 × 7 = ₹1,00,962.

Recent changes

  1. Code on Social Security in force

    Gratuity rules now sit in the Code on Social Security, 2020. Fixed-term employees qualify after one year of service instead of five.

  2. Wider definition of wages

    Allowances above 50% of total pay are added back to wages, so gratuity rises for salaries made up mostly of allowances.

  3. Tax-free limit ₹20 lakh

    The CBDT raised the income tax exemption on gratuity for non-government employees from ₹10 lakh to ₹20 lakh, in line with the higher ceiling under gratuity law.

Sources

Official sources this tool is based on:

Further reading

Last reviewed on 16 October 2026. Results are estimates to help you plan, not legal or tax advice. Check notifications on the official portals before you file or pay.

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