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Free Gratuity Calculator

Work out the gratuity you're owed when you leave a job. Enter your dates of joining and leaving and your last salary, and see the amount, the years of service that count and how much of it is tax-free, under the labour codes in force from 21 November 2025.

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Your service

From your appointment and relieving letters.

Your first and last working days both count.

Employment type
Is your employer covered by the gratuity law?

The law covers shops and businesses that have had 10 or more employees on any day in the last 12 months. Once covered, always covered.

Your wages

As on your last payslip, a month.

a month

Last drawn basic pay plus dearness allowance (DA), if any.

a month

Gross pay before deductions. If basic + DA is less than half of it, half is used instead.

Results

Your gratuity

₹0

Enter your dates of joining and leaving.

Good to know

  • By law, an employer has to pay at most ₹20,00,000 in gratuity.
  • Gratuity is tax-free up to ₹20,00,000 in total over your working life for private-sector employees, and fully tax-free for government employees. Tax-free gratuity you've received from an earlier employer uses up part of the limit.
  • An estimate, not legal or tax advice. Your employer works out the final amount, so check the figures with them.

Write the relieving and experience letters.

Make a relieving letter

How it works

  1. 1

    Enter your dates

    Your date of joining and last working day. The length of service is worked out for you.

  2. 2

    Add your salary

    Your last monthly basic + DA, and your total pay if you'd like the 50% wages rule checked.

  3. 3

    See your gratuity

    The amount, the formula with your numbers in it, and the tax-free and taxable parts.

Features

How gratuity is calculated

Gratuity is a lump sum your employer pays when you leave after long enough service, as a thank-you for the years you put in. For an employer covered by the gratuity law, it's 15 days' wages for every year of service, with a month taken as 26 working days:

Gratuity = monthly wages × 15 × years of service ÷ 26

So someone whose last basic + DA was ₹50,000 a month and who served 7 years 7 months gets ₹50,000 × 15 × 8 ÷ 26 = ₹2,30,769. The 7 months count as a full year because they're more than six months. With 7 years 5 months, only 7 years would count.

Employers not covered by the law don't have to pay gratuity, but many do under their own policy. The usual basis is half a month's wages for each completed year (wages × 15 × years ÷ 30), with part-years left out.

What changed with the labour codes

The Code on Social Security, 2020 replaced the Payment of Gratuity Act, 1972 from 21 November 2025. The basic formula is the same, but two changes matter to most people:

  • Wages are at least half of your pay. Wages mean basic pay, dearness allowance (DA) and any retaining allowance. If your other allowances come to more than 50% of your total pay, the excess is added back to wages. So a low basic with large allowances no longer shrinks your gratuity.
  • Fixed-term employees qualify after one year. Someone on a fixed-term contract gets gratuity pro rata once they've served a year, rather than waiting five years like permanent staff.
  • The five-year condition still applies to permanent employees, except when employment ends because of death or disablement. In those cases gratuity is paid whatever the length of service, to the employee or their nominee.

Gratuity and income tax

For private-sector employees, gratuity is tax-free up to ₹20 lakh in total over your working life. Anything above that is added to your income for the year and taxed at your slab rate. If you've received tax-free gratuity from an earlier employer, that uses up part of the ₹20 lakh. For central and state government employees, gratuity is fully tax-free.

Separately, the law only requires an employer to pay up to ₹20 lakh in gratuity. Some employers pay more under their own schemes, and that extra is taxable.

Frequently asked questions

Who is eligible for gratuity?

Permanent employees who leave, retire or resign after at least five years of continuous service with an employer covered by the law. Fixed-term employees qualify after one year. The five-year rule doesn't apply if employment ends because of death or disablement.

Does 4 years and 7 months count as 5 years?

For working out the amount, a final part-year of more than six months counts as a full year. But to be eligible at all, permanent employees need five years of continuous service. Some courts have treated 4 years and 240 days worked in the fifth year as five years, so if you're just short, ask your employer or an adviser.

Which salary is used for gratuity?

Your last drawn monthly wages: basic pay plus dearness allowance (DA) and any retaining allowance. Under the labour codes, if your allowances are more than half of your total pay, the excess counts as wages too, so wages are never less than half of your total pay.

Is gratuity part of my CTC?

Often, yes. Many employers include about 4.81% of basic in the CTC for gratuity (15 ÷ 26 ÷ 12). It isn't paid monthly: you receive it as a lump sum when you leave after becoming eligible.

How much gratuity is tax-free?

Up to ₹20 lakh in total over your working life for private-sector employees, and all of it for government employees. Anything above ₹20 lakh is taxed as part of your income for the year.

When must my employer pay gratuity?

Within 30 days of it becoming payable, usually your last working day. If it's paid late, the employer owes simple interest on it. If your employer refuses to pay, you can approach the authority appointed under the labour codes for your area. This calculator is an estimate, not legal advice, so check the exact figure with your employer.

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