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Gratuity Calculator India 2026
Looking for a gratuity calculator India employees and HR teams can trust? This one follows the Payment of Gratuity Act, 1972 and the Labour Code rules in force from 21 November 2025, including the 1-year rule for fixed-term staff and the 50% wage rule.
- Permanent and fixed-term employees
- Applies the new 50% wage rule
- Shows formula, years counted and tax-exempt amount
Calculate gratuity
Pick a country, enter your salary and dates of service.
Employee type
Employer covered under the Gratuity Act?
₹
Basic pay plus Dearness Allowance. Add gross pay below to apply the 50% wage rule.₹
Your result is ready
Share a few details with your work email to see your result. We will also send you useful HR resources.
How to calculate gratuity in India: the gratuity formula is last drawn Basic + DA × 15 / 26 × years of service. A final year of more than six months counts as a full year. Gratuity is capped at ₹20,00,000 and permanent employees usually need 5 years of service, while fixed-term employees qualify after 1 year.
Gratuity formula in India
Gratuity = Last drawn Basic + DA × 15 / 26 × Years of service
Why 15 and 26? The Act gives 15 days of wages for every year of service, and a month is treated as 26 working days (Sundays excluded). So one month of wages divided by 26 gives the daily wage, and 15 of those days are paid per year.
Basic salary or CTC? Gratuity is calculated on Basic pay plus Dearness Allowance, not CTC. Under the Code on Social Security, 2020, wages must be at least 50% of total pay. If allowances push Basic + DA below half, the shortfall is added back before gratuity is worked out.
Worked example
Basic + DA of ₹50,000 and 9 years 7 months of service. The 7 months round up, so service counts as 10 years: 50,000 × 15 / 26 × 10 = ₹2,88,462.
How to calculate gratuity with this calculator
- Pick the employee type. Choose permanent or fixed-term. Fixed-term staff qualify after 1 year under the new Labour Code.
- Say whether the employer is covered by the Act. Covered employers (10 or more staff) use the 15 / 26 gratuity formula. Others use 15 / 30.
- Enter last drawn Basic + DA. Add monthly gross pay too if you want the gratuity calculator India tool to apply the 50% wage rule.
- Enter the joining date and last working day. The calculator counts years and rounds up a final year of more than six months.
- Click Calculate. You see the gratuity amount, the formula used and the tax-exempt portion.
Which gratuity formula applies
| Situation | Formula | Service rule |
|---|---|---|
| Employer covered by the Act (10 or more employees) | Wages × 15 / 26 × years | Final year over 6 months rounds up |
| Employer not covered by the Act | Wages × 15 / 30 × years | Completed years only |
| Fixed-term employee (Labour Code) | Wages × 15 / 26 × years, pro rata | Eligible after 1 year |
Gratuity eligibility
- Permanent employees qualify after 5 years of continuous service with the same employer.
- Fixed-term employees qualify after 1 year under the Labour Codes in force from 21 November 2025.
- Death or disablement: the minimum service rule does not apply.
Gratuity is paid on resignation, retirement, termination (except dismissal for misconduct covered by the Act), death or disablement.
New gratuity rules 2025: what changed
- Fixed-term staff now earn gratuity after 1 year instead of 5, on a pro-rata basis.
- The 50% wage rule means Basic + DA must make up at least half of pay, which raises gratuity for many salary structures with a low Basic.
- The formula and the ₹20,00,000 ceiling stay the same.
Gratuity limit and tax exemption
The maximum gratuity under the Act is ₹20,00,000. For private sector employees, gratuity is tax-free up to the lowest of the amount received, ₹20,00,000, or the formula amount. Anything above is taxed as salary. Government employees receive gratuity fully tax-free. Employers can always pay more than the statutory amount under their own policy.
Sources
This gratuity calculator India page is based on the following official sources, reviewed in October 2026:
- Ministry of Labour and Employment, Government of India (Payment of Gratuity Act, 1972 and Code on Social Security, 2020)
- Income Tax Department, Government of India (tax exemption on gratuity under Section 10(10))
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Frequently asked questions
Is this gratuity calculator India tool free?
Yes. The gratuity calculator is free. You share your name, work email and phone number once, and then you can calculate as many times as you like.
How is gratuity calculated in 2026?
Gratuity equals last drawn Basic + DA × 15 / 26 × years of service for employers covered by the Payment of Gratuity Act. Since 21 November 2025, wages must be at least 50% of total pay and fixed-term employees qualify after 1 year.
Is gratuity calculated on basic salary or CTC?
On Basic pay plus Dearness Allowance, not CTC. Under the Labour Codes, if Basic + DA is less than 50% of total pay, the difference is added to wages for gratuity.
What is 15 and 26 in the gratuity formula?
15 is the number of days of wages paid for each year of service. 26 is the number of working days in a month, used to convert monthly wages into a daily rate.
Can I get gratuity before 5 years?
Fixed-term employees qualify after 1 year. Permanent employees generally need 5 years, though the rule does not apply on death or disablement. Some courts have treated 4 years and 240 working days as 5 years, so check with HR if you are close.
Is gratuity taxable?
For private sector employees, gratuity is exempt up to ₹20,00,000. Any amount above the exempt limit is taxed at slab rates. Government employees receive gratuity tax-free.
Is gratuity paid if I resign?
Yes. Under the Payment of Gratuity Act, 1972, an employee who resigns after at least 5 years of continuous service is entitled to gratuity. Under the Code on Social Security, 2020, fixed-term employees qualify after 1 year of continuous service. The amount uses the same formula as retirement or termination.
When must the employer pay gratuity?
The employer must pay gratuity within 30 days of the date it becomes payable, under Section 7(3) of the Payment of Gratuity Act. If payment is delayed, the employer must also pay simple interest for the period of delay at the rate notified by the government.
Are my salary details stored?
No. Salary and date inputs are calculated in your browser and never sent anywhere. Only the name, work email and phone number you enter are shared with Peoplebox.