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Gratuity Calculator: Amount, Eligibility and Tax under the New Labour Code

Free Indian gratuity calculator for the Code on Social Security, 2020 and the Payment of Gratuity Act, 1972 — eligibility, 15/26 formula, ₹20 lakh ceiling and tax split in your browser.

Work out your gratuity in seconds under the new Code on Social Security, 2020 (in force from 21 November 2025) or the Payment of Gratuity Act, 1972. Enter your last drawn basic pay and DA and your years of service, or just your joining and exit dates. The calculator checks eligibility (5 years, or 1 year for fixed-term staff, none on death or disablement), applies the over-6-months rounding rule and the ₹20 lakh ceiling, and splits the amount into tax-free and taxable parts for government and private employees. A wages helper applies the Code’s 50% rule. It is free, needs no sign-up, works in Hindi and English, and your numbers never leave your browser.

By ScaleSaathi Editorial · Rules last checked 23 Oct 2026 · Sources

Four checks before you rely on the gratuity figure

  1. Which law: an exit on or after 21 November 2025 falls under the Code on Social Security, 2020; an earlier exit under the Payment of Gratuity Act, 1972.
  2. Eligibility: 5 years of continuous service as the general rule; 1 year for fixed-term employees, 3 years for working journalists, and no minimum on death or disablement.
  3. Wages, not CTC: use last drawn basic + DA (under the Code, allowances above 50% of pay are added back). The formula is wages × 15 ÷ 26 × years, and a part year over 6 months counts as a full year.
  4. Limits: the ceiling is ₹20 lakh. Rules last checked 23 Oct 2026; the result is an estimate, not legal or tax advice.

Gratuity Calculator (India): Amount, Eligibility and Tax

Covers the Code on Social Security, 2020 (in force from 21 Nov 2025) and the Payment of Gratuity Act, 1972 (for exits before that date). Your numbers stay in your browser.

Modes: covered employees (Code or 1972 Act by exit date), fixed-term, seasonal, working journalist, and employer not covered (income-tax formula).

Count continuous service with this employer. Both the joining day and the last day are counted.

Basic pay + dearness allowance (+ retaining allowance). Under the Code, add back allowances above 50% of total pay: use the helper below.

Wages helper: work out “wages” from your salary slip

Other allowances = HRA, conveyance, special allowance, overtime, commission, bonus and so on.

Income tax on gratuity

Leave “received” blank to use the calculated amount. Use it if your employer paid more (for example under company policy).

₹0

Estimate from the scalesaathi.in gratuity calculator. Your employer’s records and the law decide the final amount.

Estimate only. This calculator applies the formulas in the law to the figures you enter. It does not check whether your employer is covered, whether your service was continuous, forfeiture, a better company scheme, or rules for government pension schemes. The Code’s rules and notifications may change. Confirm with your employer, HR or a tax adviser before you rely on it.

Last verified 23 Oct 2026

Method: completed years are rounded up when the extra part is more than 6 months. Amounts are rounded to the nearest rupee. “Not covered” uses the income-tax formula (half a month’s average salary for each completed year), because the law gives no fixed amount for such employers.

Gratuity calculation formula

Gratuity for covered employees is last drawn monthly wages × 15 ÷ 26 × years of service, with years rounded up when the leftover is more than 6 months.

  • Covered employees: gratuity = last drawn monthly wages × 15 ÷ 26 × years of service.
  • Years of service: count each completed year, and add one more year if the extra part is more than 6 months. 7 years 7 months counts as 8; 7 years 6 months counts as 7.
  • Wages: basic pay plus dearness allowance. Under the Code, retaining allowance too, plus any allowances above 50% of total pay.
  • Seasonal establishments: 7 days' wages for each season.
  • Ceiling: ₹20 lakh.
  • Employer not covered: no fixed amount in the law. The income-tax formula, half a month's average salary × completed years, is the usual benchmark.

Worked examples (each is a test case in our suite)

CaseYears countedGratuity
₹50,000 wages, 10 years 7 months, resigned11₹3,17,308
₹50,000 wages, exactly 5 years 6 months5 (6 months is not more than 6)₹1,44,231
₹50,000 wages, 5 years 6 months 1 day6₹1,73,077
₹50,000 wages, 4 years 11 months 29 days, resignednot eligible₹0
₹40,000 wages, 2 years 8 months, death in service3 (no 5-year minimum)₹69,231
₹60,000 wages, fixed-term contract, 1 year 8 months2₹69,231
₹2,50,000 wages, 30 years30 (formula ₹43,26,923)₹20,00,000 (ceiling)
Seasonal factory, ₹800 a day, 6 seasons7 days × 6₹33,600
Not covered, ₹50,000 average salary, 10 years 7 months10 (completed years only)₹2,50,000 (tax formula)

Gratuity eligibility: the 5-year rule and its exceptions

Permanent staff need 5 years of continuous service; death, disablement, fixed-term (1 year under the Code) and working journalists (3 years) are the main exceptions.

Gratuity is paid when your job ends after at least 5 years of continuous service: on superannuation, retirement, resignation, termination, death or disablement, or when a fixed-term contract ends. The 5-year minimum does not apply on death or disablement from an accident or disease. Under the Code, fixed-term employees are eligible after one year and working journalists after 3 years.

Service counts as continuous even with breaks for sickness, accident, leave, lay-off, a strike or a lock-out that was not your fault. If your service was not unbroken, the law deems a year of continuous service if you actually worked at least 240 days in the 12 months (190 days for work below ground in a mine or in an establishment that works less than 6 days a week).

The "4 years 240 days" question. Some High Court rulings have read the 240-day rule to count a fifth year in which you worked 240 days. That reading comes from case law; we could not confirm it on an official government source, so the calculator does not apply it automatically. If it applies to you, ask your employer or a lawyer.

What changed under the new labour code (from 21 November 2025)

From 21 November 2025 the Code on Social Security, 2020 replaced the Payment of Gratuity Act, 1972 for new exits, with the same 15/26 formula plus fixed-term and 50% wages rules.

The Code on Social Security, 2020 came into force on 21 November 2025 (Gazette notification S.O. 5319(E)) and repealed the Payment of Gratuity Act, 1972. For gratuity:

  • Same formula and the same 5-year rule for permanent employees (section 53).
  • Fixed-term employees: eligible after one year of continuous service, paid on a pro-rata basis.
  • Wider "wages": basic + DA + retaining allowance. If the excluded items (HRA, conveyance, bonus, overtime, commission and so on) are more than 50% of all remuneration, the excess is added to wages.
  • Ceiling: set by notification, currently ₹20 lakh according to the Labour Ministry.
  • Start date: the Labour Ministry says gratuity under the Code applies from 21 November 2025. If your job ended before then, the 1972 Act applies; the calculator picks the law from your exit date.

The 50% wages rule: Labour Ministry example

Basic + DA ₹20,000, allowances ₹40,000, other components (gratuity and retrenchment compensation) ₹16,000. Total remuneration ₹76,000; 50% is ₹38,000. Allowances are ₹2,000 over that, so ₹2,000 is added back and wages for gratuity become ₹22,000. Open the wages helper in the calculator to run your own salary slip.

Income tax on gratuity (Income-tax Act, 2025)

Government death-cum-retirement gratuity is fully tax-free; for others the tax-free part is the lowest of the amount received, the formula amount, and ₹20 lakh.

WhoTax-free amount
Government employees (death-cum-retirement gratuity)Entire amount
Other employees covered by the gratuity lawGratuity received, limited to the statutory amount (15/26 formula, ₹20 lakh ceiling)
Other employees not coveredLowest of: gratuity received; half a month's average salary (last 10 months) × completed years; the ₹20 lakh limit less any exemption used earlier
Gratuity received while still in serviceFully taxable

From 1 April 2026 these are items 3, 5 and 6 of the table in section 19 of the Income-tax Act, 2025 (earlier section 10(10) of the Income-tax Act, 1961). The 2025 Act still refers to section 4 of the 1972 Act for covered employees; the calculator applies the same formula to Code cases. The taxable part is added to your salary income.

Settling an exit? Use our full and final settlement checklist and relieving letter samples.

Gratuity calculator FAQ

How is gratuity calculated?

Gratuity = last drawn monthly wages × 15 ÷ 26 × years of service. Wages means basic pay plus dearness allowance (and, under the new Code, retaining allowance and any allowances above 50% of total pay). Example: ₹50,000 wages and 10 years 7 months of service count as 11 years, so gratuity is ₹50,000 × 15 ÷ 26 × 11 = ₹3,17,308.

Why is 26 used in the gratuity formula?

The law says that for a monthly rated employee, 15 days' wages are worked out by dividing the monthly wages by 26 and multiplying by 15. Both the Payment of Gratuity Act, 1972 and the Code on Social Security, 2020 say this in so many words.

Is gratuity calculated on basic salary or CTC?

Not on CTC. It is calculated on wages: basic pay plus dearness allowance. Under the Code on Social Security, 2020, if allowances such as HRA, special allowance, conveyance and bonus are more than 50% of total pay, the excess is added to wages, so gratuity can be higher than on basic alone.

What is the new gratuity rule under the labour codes?

The Code on Social Security, 2020 came into force on 21 November 2025 and replaced the Payment of Gratuity Act, 1972. The formula and the 5-year rule stay the same, but fixed-term employees now get gratuity after one year, and the new definition of wages adds back allowances above 50% of total pay. The Labour Ministry says gratuity under the Code applies from 21 November 2025.

Am I eligible for gratuity after 4 years 7 months?

Not under the plain statutory rule: permanent employees need 5 years of continuous service. Rounding up a part year above 6 months only changes the amount once you are eligible. Some court rulings have treated 240 days worked in the fifth year as a full year; check your case with your employer or a lawyer before you rely on that.

Who gets gratuity without completing 5 years?

Employees whose job ends due to death or disablement from an accident or disease, and fixed-term employees under the Code (eligible after one year of service). Working journalists qualify after 3 years under the Code.

Do fixed-term employees get gratuity?

Yes. Under the Code on Social Security, 2020 a fixed-term employee is eligible after one year of continuous service and is paid on a pro-rata basis. This applies when the job ends on or after 21 November 2025.

What is the maximum gratuity amount?

₹20 lakh. The Labour Ministry's FAQ on the labour codes says the ceiling notified by the Central Government is currently ₹20 lakh, the same figure set under the 1972 Act in March 2018. An employer can pay more under a better scheme, but the extra is taxable.

Is gratuity tax-free?

For government employees, death-cum-retirement gratuity is fully tax-free. For other employees, the tax-free part is the lowest of the gratuity received, the formula amount, and ₹20 lakh; the rest is taxed as salary. From 1 April 2026 this is in section 19 of the Income-tax Act, 2025 (earlier section 10(10) of the 1961 Act).

How is gratuity worked out if my employer is not covered by the Act?

The law covers factories, mines, oilfields, plantations, ports, railway companies, and shops or establishments with 10 or more employees. If your employer is outside it, gratuity depends on your contract or company policy. For tax, the tax-free part is the lowest of the amount received, half a month's average salary of the last 10 months × completed years, and ₹20 lakh.

How much gratuity is paid in a seasonal establishment?

An employee of a seasonal establishment who is not employed all year gets 7 days' wages for each season instead of 15 days' wages for each year.

Is this gratuity calculator free, and is my data saved?

It is free and needs no sign-up. Everything runs in your browser; a share link only puts your inputs in the page address.

Is gratuity 5 years or 4.8 years?

The statute needs 5 completed years of continuous service for permanent employees. 4 years 8 months (about 4.8 years) is not enough on the plain rule: rounding above 6 months only changes the payable amount after you are eligible. Some courts have treated 240 days worked in the fifth year as a full year; that is case law, not an official government rule this calculator applies.

Can we get gratuity in 4.11 years?

No under the plain statutory rule. 4 years 11 months (about 4.11 years if you read months as tenths) is still under 5 years, so a resignation is not eligible. Death or disablement can waive the 5-year minimum; fixed-term staff under the Code need only 1 year.

How is 7 years 7 months gratuity calculated?

7 years 7 months rounds to 8 years because the part after 7 years is more than 6 months. On ₹50,000 last drawn monthly wages: ₹50,000 × 15 ÷ 26 × 8 = ₹2,30,769 (capped only if the formula exceeds ₹20 lakh).

What is the latest gratuity rule for 2026 in India?

From 21 November 2025 the Code on Social Security, 2020 governs gratuity (Payment of Gratuity Act, 1972 repealed for new exits). The 15/26 formula and 5-year rule stay; fixed-term employees become eligible after one year; wages can include allowances above 50% of total pay. Tax from 1 April 2026 is in section 19 of the Income-tax Act, 2025. The Labour Ministry says the ceiling is currently ₹20 lakh.

Related calculators and guides

Sources (checked 23 Oct 2026)