Gratuity Calculator (India)
Gratuity Calculator (India)
Gratuity under India’s Code on Social Security, 2020: 15 days’ wages for each year of service, using your last drawn monthly wages, with the rounding rule for part years and the service needed to qualify.
Gratuity
Last wages $50,000 a month, 10 years and 7 months of service
Gratuity for a monthly-paid employee
- W
- the monthly wages last drawn: Basic + DA (and retaining allowance)
- Y
- completed years of service, plus one if the final part year is more than six months
- 26
- the Code’s divisor: a month’s wages ÷ 26 is taken as one day’s wages
Worked example
Last wages $50,000 a month, 10 years and 7 months of service
7 months is more than six, so the service counted is 11 years
15 days' wages = 50,000 ÷ 26 × 15 = $28,846.15
Gratuity = 15 × 50,000 × 11 ÷ 26 = $3,17,308
With exactly six months instead, the service counted would be 10 years: $2,88,462
Gratuity by years of service and monthly wages
| Years | 25,000 a month | 50,000 a month | 1,00,000 a month |
|---|---|---|---|
| 5 | $72,115 | $1,44,231 | $2,88,462 |
| 10 | $1,44,231 | $2,88,462 | $5,76,923 |
| 15 | $2,16,346 | $4,32,692 | $8,65,385 |
| 20 | $2,88,462 | $5,76,923 | $11,53,846 |
| 30 | $4,32,692 | $8,65,385 | $17,30,769 |
The rules, and what changed in 2025
Since 21 November 2025, gratuity in India has been governed by the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972 when the four Labour Codes came into force. The formula did not change. For every completed year of service, and for a final part year of more than six months, the employer pays 15 days’ wages. For a monthly-paid employee that is the monthly wages last drawn ÷ 26 × 15, because the Code divides the monthly rate by 26 to get a day’s wages. Ten years and seven months counts as eleven years; ten years and exactly six months counts as ten.
Who qualifies. Gratuity is paid when employment ends, whether by retirement, resignation or termination, after at least five years of continuous service. There are exceptions. There is no minimum on death or disablement, when the gratuity goes to the nominee or legal heirs. A working journalist needs three years. A fixed-term employee qualifies after one year of service under the contract, a change brought in by the Code, and is paid pro rata. Piece-rated and seasonal employees have their own calculations, which this page does not cover.
What counts as wages. Basic pay, dearness allowance and retaining allowance. The Code adds a rule: if the excluded allowances (such as HRA and conveyance) add up to more than half of your total pay, the excess is treated as wages. For many private-sector pay structures that raises the gratuity. According to the Ministry of Labour, the new definition applies to gratuity paid on or after 21 November 2025.
Limits and tax. Under the old Act, statutory gratuity was capped at ₹20 lakh (from March 2018). The Code leaves the ceiling to be notified by the Central Government, so check the current figure. An employer can pay more under a contract or scheme. Gratuity can be wholly or partly tax-free depending on your employment and the tax rules in force when you receive it; this page does not calculate tax. For the rest of your retirement savings from employment, see the EPF calculator. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How is gratuity calculated?
15 × last drawn monthly wages (Basic + DA) × years of service ÷ 26. $50,000 a month for 10 years and 7 months gives 15 × 50,000 × 11 ÷ 26 = $3,17,308.
Does six months of service count as a year?
Only if it is more than six months. The Code pays for every completed year “or part thereof in excess of six months”, so exactly six months does not round up, and six months and a day does.
Can I get gratuity before five years?
Yes, in some cases: on death or disablement there is no minimum, a working journalist needs three years, and a fixed-term employee qualifies after one year under the contract. Otherwise the minimum is five years of continuous service.
Is gratuity paid on resignation?
Yes, if you have completed the qualifying service. Resignation is one of the ways employment can end under the rule, along with retirement and termination. It can be forfeited, fully or partly, only for specific misconduct set out in the law.
Related calculators
References
- The Code on Social Security, 2020 (Act No. 36 of 2020), section 53, Payment of gratuity. In force from 21 November 2025 (Press Information Bureau, Ministry of Labour and Employment, 21 November 2025).
- Ministry of Labour and Employment. Additional FAQs on Labour Codes (as on 16.03.2026): fixed-term employees eligible after one year; revised definition of wages applies to gratuity from 21.11.2025. https://www.labour.gov.in
- The Payment of Gratuity Act, 1972 (replaced by the Code), section 4; ceiling of ₹20,00,000 notified 29 March 2018.
- The Code on Social Security, 2020, section 2(88): definition of wages, including the rule that excluded allowances above half of total remuneration are added to wages.