Gratuity Calculator
Short answer
Last checked · 2 key figures from the fact register
Key facts
| Fact | Value | Source | Date checked |
|---|---|---|---|
| Gratuity formula | Last drawn wages × 15 ÷ 26 × completed years; five years of service Reported by reputable sources | CalcGuru: gratuity for fixed-term employees (opens in a new tab) | |
| Gratuity for fixed-term employees | Pro rata after 1 year (Code on Social Security, s.53) Reported by reputable sources | CalcGuru: gratuity for fixed-term employees (opens in a new tab) |
Gratuity is a lump sum an employer pays when you leave after at least five years of service. For employees covered by the Payment of Gratuity Act the formula uses 15 days of last drawn salary for each completed year, with 26 working days in a month.
Estimated gratuity
₹3,46,154
- Years counted
- 10
- Eligible (5+ years)
- Yes
- Above the tax-free limit
- ₹0
How it is calculated
- Gratuity = Last drawn (Basic + DA) × 15 ÷ 26 × completed years
- More than 6 months in the final year counts as a full year.
- Needs 5+ years of service for permanent employees. Tax-free limit for non-government employees: ₹20 lakh.
- Fixed-term employees under the labour codes can qualify after one year; this calculator does not model that.
Estimates for information only; not financial, tax or legal advice.
Worked example
Example (the default inputs): last drawn Basic + DA ₹60,000, 10 years and 3 months of service. Three extra months does not exceed six, so 10 years count. Gratuity = ₹60,000 × 15 ÷ 26 × 10 = ₹3,46,154 (rounded).
Frequently asked questions
How many years of service do I need?
Five years of continuous service, except in cases such as death or disablement.
Is gratuity taxable?
Gratuity for employees covered by the Act is tax-free up to the statutory limit. Government employees have their own rules, so confirm with the Income Tax Department.
When does a part-year count?
More than six months in the final year is rounded up to a full year.
Does this calculator cover fixed-term employees under the new labour codes?
No. This calculator applies the five-year rule. Reports say the labour codes in force from 21 November 2025 allow certain fixed-term employees to claim gratuity after one year on a pro-rata basis. Check with HR or the Labour Ministry notification.
Related perks
Sources and status
Each figure on this page comes from the fact register. What the badges mean.
- Reported by reputable sourceschecked 2026-10-16
Gratuity formula: last drawn wages x 15 / 26 x completed years; five years of service for permanent employees; tax-free up to the least of 20 lakh, the actual amount or the formula for non-government employees
- Reported by reputable sourceschecked 2026-10-16
Fixed-term employees get pro-rata gratuity after 1 year (Code on Social Security, s.53). Whether this covers contracts that began before 21 Nov 2025 is unclear. Payment is due within 30 days. Government employees are fully exempt
Government employee? Find your salary by pay level and see 8th Pay Commission scenarios.
Estimates for information only; not financial, tax or legal advice. Disclaimer.