Gratuity Calculator
Calculate gratuity as 15/26 of last drawn monthly wages for every completed year of service, capped at ₹20 lakh. Part of a year over six months rounds up; six months or fewer is dropped.
Free · No sign-up · Nothing leaves your browser · Figures reviewed 22 September 2026
Your details
Wages as the Code defines them — basic, dearness allowance and retaining allowance. Not gross.
Fixed-term employees vest at one year, not five.
There is no minimum service on death or disablement.
Gratuity payable
₹2,07,692
15/26 × ₹45,000 × 8 years.
How it is worked out
- Last drawn monthly wagesBasic + DA + retaining allowance
- ₹45,000
- Actual service
- 7 years 11 months
- Years counted11 months is more than six, so it rounds up
- 8 years
- Daily wageMonthly wages ÷ 26 — the divisor is 26, not 30
- ₹1,730.77
- Before the ceiling
- ₹2,07,692
- Payable
- ₹2,07,692
Tax
- Exempt
- ₹2,07,692
- Taxable
- ₹0
The income-tax exemption cap and the statutory ceiling are both ₹20,00,000 — the same number under two different rules. The exemption is a lifetime limit across employers.
Payable within 30 days of falling due, with an interest penalty for delay.
Since 21 November 2025 the base has been wages as defined by the Code on Social Security, including the 50% add-back. For an allowance-heavy salary structure that raises the base, so long-running service may need splitting at that date.
This is an estimate for planning, not tax or legal advice. Statutory rates and thresholds are date-effective and change by notification — confirm against the current one before you run payroll or file.
Gratuity is a lump sum for length of service, payable under section 53(2) of the Code on Social Security. The formula is fifteen days' wages for each completed year, where a day's wages is a month's wages divided by 26 — not 30.
Two details decide most disputes: which months count as a year, and what counts as wages. This calculator handles both, and flags the fixed-term rule that vests gratuity at one year instead of five.
The formula
Gratuity = (15 ÷ 26) × last drawn monthly wages × completed years of service.
The divisor is 26, not 30. That is explicit in the statute and it is worth checking on any calculator you use, because dividing by 30 understates the payout by about 13%.
Completed years round on a six-month boundary, and the wording is precise: a part of a year in excess of six months counts as a full year. Five years and seven months counts as six. Five years and six months counts as five.
Who is eligible
Five years of continuous service for permanent employees, on superannuation, retirement, resignation, death or disablement. Continuous service is not broken by sickness, accident, authorised or unauthorised leave, lay-off, a strike, a lock-out, or a stoppage that is not the employee's fault.
Fixed-term employees vest at one year. That is a genuine two-track system, not a rounding of the same rule, and any calculation has to branch on employment type.
On death or disablement there is no minimum service at all. Working journalists vest at three years.
What changed on 21 November 2025
The base moved from the old, narrower definition of wages to the Code's definition, which includes the 50% add-back: where excluded allowances exceed half of total remuneration, the excess is pulled back into wages.
For an allowance-heavy salary structure that raises the gratuity base, and because the change has a date, service spanning it has to be split at that date rather than calculated on one base throughout.
Frequently asked questions
- What is the gratuity formula in India?
- Fifteen divided by 26, multiplied by last drawn monthly wages, multiplied by completed years of service. The 26 is the statutory divisor for a month, and using 30 instead understates the result by about 13%.
- Is gratuity payable after 4 years and 7 months?
- No. The five-year threshold is on continuous service, and 4 years 7 months does not reach it. The six-month rounding applies to how many years are counted once you are eligible, not to eligibility itself.
- What is the maximum gratuity payable?
- ₹20 lakh. The same figure is also the income-tax exemption limit, but they are two different rules that happen to share a number — the statutory ceiling limits what is payable, the exemption limits what is tax-free across your whole career.
- Do fixed-term employees get gratuity?
- Yes, and they vest at one year rather than five. That is a deliberate two-track rule under the Code on Social Security.
- Is gratuity calculated on basic or gross salary?
- On wages as the Code defines them — basic, dearness allowance and retaining allowance — subject to the 50% add-back where excluded allowances exceed half of total remuneration. Not on gross.
- When must gratuity be paid?
- Within 30 days of becoming payable, with interest running on a late payment. It does not wait for the rest of the full-and-final settlement to be agreed.
About this tool
Built by the ViniOffice team. Figures and rules last reviewed 22 September 2026 against the statutory reference this team maintains. Indian statutory rates are date-effective and change by notification — confirm against the current one before running payroll or filing. This is an estimate for planning, not tax or legal advice. Statutory rates and thresholds are date-effective and change by notification — confirm against the current one before you run payroll or file.
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