Gratuity calculator under the new labour code
This gratuity calculator tells you whether you are eligible and how much gratuity you should get when you leave a job in India. Enter your service, last drawn basic pay plus DA, the employer type and why you are leaving; it shows a verdict, the years counted after rounding, the formula, the ceiling and the tax-free part.
Since 21 November 2025 gratuity falls under the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972. The formula is unchanged — 15 days’ wages per year of service, with 26 working days to a month — but fixed-term employees now qualify after one year, and allowances above half of your pay are added back to wages.
A separate mode covers central government staff under the CCS (Pension) Rules. Your figures stay in your browser; the result is an estimate, not legal or tax advice. Working in the Gulf? Use the end-of-service calculator (UAE and Saudi Arabia) or the UAE leave salary calculator.
How to use the Gratuity Calculator
- Choose Joining & leaving dates or Years + months and enter your service.
- Enter your Last drawn basic + DA per month.
- Pick the Employer type and the Reason for leaving.
- With 4 years and some months, tick the 240-day box only if you actually worked 240 days or more in your fifth year.
- Optionally open 50% wage rule, ceiling and tax to add total pay, the amount actually paid and tax-free gratuity from earlier jobs.
Gratuity Calculator features
Eligibility verdict
The 5-year rule and its exceptions: death or disablement, fixed-term contracts after one year, and the 240-day argument.
Rounding shown
More than six months in the last year counts as a full year; six months or less is dropped.
50% wage check
Raises the wage used to half of total pay when basic + DA is lower.
Ceilings and tax
Applies the ₹20 lakh ceiling (₹25 lakh for central government) and splits the payout into exempt and taxable parts.
Three employer types
Covered private employers, employers outside the gratuity law and central government.
Gratuity formula with worked examples
For a covered establishment (generally ten or more employees), gratuity = last drawn wages × 15 ÷ 26 × years of service, where wages are basic pay + DA (+ retaining allowance).
- ₹50,000 × 15 ÷ 26 × 10 years = ₹2,88,462.
- 4 years 7 months on death or disablement: the 7 months round up to 5 years — ₹1,44,231.
- 9 years 6 months: exactly six months does not round up, so 9 years — ₹2,59,615.
- ₹1,20,000 × 15 ÷ 26 × 40 = ₹27,69,231, limited by the ceiling to ₹20,00,000.
- Basic + DA ₹30,000 on total pay ₹80,000: wages rise to half (₹40,000), so 10 years gives ₹2,30,769, not ₹1,73,077.
Who is eligible: the 5-year rule and its exceptions
Employers outside the law (for example, fewer than ten employees) owe gratuity only under a contract or policy. Covered employers must pay within 30 days: you apply in Form IV, the employer replies in Form V within 15 days, and delay carries simple interest.
| Reason for leaving | Minimum service | Notes |
|---|---|---|
| Resignation, retirement, termination | 5 years | Several High Courts accept 4 years plus 240 days worked in the fifth |
| Death or disablement | None | Paid to the nominee or heirs on death |
| End of a fixed-term contract | 1 year | Paid pro rata |
| Working journalists | 3 years | Not modelled here |
How much gratuity is tax-free
- Government employees: fully exempt.
- Private, covered by the gratuity law: the least of the amount received, the formula amount and ₹20 lakh — a lifetime limit across employers.
- Private, not covered: the least of the amount received, ₹20 lakh and half a month’s average salary (last 10 months) per completed year — the 15/30 formula.
- The rest is taxed as salary in the year received. Estimate it with the income tax calculator.
Central government employees (CCS rules)
Under the CCS (Pension) Rules, 2021, retirement gratuity is ¼ of basic + DA for each completed six-month period, up to 16½ times, after 5 years of service. Death gratuity is 2 times for under 1 year, 6 times for 1–5 years, 12 times for 5–11 years, 20 times for 11–20 years, then ½ per six-month period up to 33 times. Resignation forfeits past service. State rules differ.
Rules used (as of October 2026)
- Code on Social Security, 2020, Chapter V — in force from 21 November 2025.
- Industrial Relations Code, 2020 — fixed-term employees qualify after one year; Social Security (Central) Rules, 2026 (8 May 2026) — forms and timelines.
- Ceiling ₹20 lakh — S.O. 1420(E), 29 March 2018. The Code lets the Centre notify a new figure; we found no official notification changing it by October 2026, though claims of a ₹25 lakh private-sector limit circulate online.
- ₹25 lakh for central government staff from 1 January 2024 (Department of Pension order, 30 May 2024).
- Tax — section 10(10) of the Income-tax Act, 1961; the Income-tax Act, 2025 applies from 1 April 2026 and we found no change to these limits — confirm before filing.
Gratuity Calculator FAQ
How is gratuity calculated?
Last drawn basic + DA × 15 ÷ 26 × years of service, counting a final part year over six months as a full year. ₹50,000 for 10 years gives ₹2,88,462; this gratuity calculator shows each step.
Do I get gratuity after 4 years and 7 months?
On death or disablement, yes — it counts as 5 years. On resignation the 5-year rule applies, though several High Courts have accepted 240 days worked in the fifth year.
Are fixed-term employees eligible after one year?
Yes. A fixed-term employee with at least one year of service gets gratuity pro rata, using the same 15/26 formula.
What is the maximum gratuity amount?
₹20 lakh under the Code and ₹25 lakh for central government employees. Employers may pay more, but the excess is taxable.
Does the new labour code increase my gratuity?
Only if basic + DA is less than half of your total pay — then the excess allowances count as wages.
How soon must the employer pay gratuity?
Within 30 days of it becoming payable, or simple interest is due for the delay.