Gratuity calculator
Gratuity is a lump sum your employer pays when you leave after long service. Enter your last basic pay and years of service to see how much you will get.
Rules for FY 2026-27 · Checked 24 October 2026
2.77 lakh, counting 8 years of service.
- That is 4.6 months of your basic pay.
- One more year of service adds ₹34.6k.
- All of it is tax-free.
- Tax-free
- ₹2,76,923
- Taxed at your slab rate
- ₹0
- Total gratuity
- ₹2,76,923
More than 6 months in the last year counts as a full year.
The gratuity formula
Gratuity = 15 × last monthly basic and DA × years of service ÷ 26. The 15 stands for 15 days of pay for each year, and 26 is the number of working days in a month.
In the last year, more than 6 months counts as a full year. So 10 years and 7 months is counted as 11 years. On ₹50,000 basic, that gives about ₹3,17,308.
If your employer is not covered by the gratuity law, the formula uses 30 instead of 26 and counts only completed years.
What the labour codes changed
The four labour codes took effect on 21 November 2025. The Code on Social Security keeps the formula but changes two things:
- Fixed-term employees get gratuity after 1 year of service instead of 5. Permanent employees still need 5 years.
- Wages must be at least half of your total pay. If allowances are more than 50% of pay, the excess counts as wages, which raises gratuity for people with a low basic.
Tax on gratuity
Private-sector employees get up to ₹20 lakh of gratuity tax-free over their whole career. Anything above is taxed at the slab rate. Government employees get all of it tax-free.
Frequently asked questions
Am I eligible for gratuity before 5 years?
Permanent employees need 5 years of continuous service, except on death or disability. Fixed-term employees qualify after 1 year under the Code on Social Security.
Is 4 years and 8 months counted as 5 years?
Several court rulings have counted 4 years and 240 working days as 5 years of continuous service, but employers differ. Check with your HR.
What is the maximum gratuity?
Under the law, up to ₹20 lakh. Employers may pay more, but the extra is taxed.
Is gratuity part of CTC?
Many employers include it at 4.81% of basic in the CTC. You get it only when you leave or retire.
Sources: Ministry of Labour and Employment, Income Tax Department