Gratuity Calculator
Estimate gratuity from your verified monthly wage base and continuous service. See the service check, formula, payment ceiling and the details to reconcile with HR.
Your service & wages
Enter your wages, service and exit case
Current Code framework for an exit event on or after 21 November 2025. Use the final wage base confirmed by payroll.
Payment ceiling and scope
- Current standard ceiling
- ₹20,00,000
- Amount above that ceiling
This is an estimate before tax, not an employer settlement or a legal entitlement decision. Better contract terms, continuous-service findings and statutory exceptions can change the outcome.
How this result was calculated
Service-length illustration
Same entered wages at each point, with the selected calculation convention. Values are formula illustrations, even where a service threshold has not been met; they are not accumulated account balances.
Show formula values for completed years
| Completed years | Service check | Formula value | Ceiling-limited value |
|---|
Current law context
First identify the rule that applies.
Gratuity is an employer-paid service benefit. An online formula helps check the arithmetic, but the applicable coverage and exit conditions matter first.
What changed on 21 November 2025?
The Government made the four Labour Codes effective from that date. This page uses the Code on Social Security, 2020 framework for current monthly-rated estimates. The Ministry’s later FAQs clarify revised wages and directly engaged fixed-term employees. See the official commencement announcement and March 2026 clarifications.
2026 update: check the fixed-term convention
The Social Security (Central) Rules, 2026, notified on 8 May 2026, include rule 33: at least one year under the contract, with a provision for rounding subsequent service exceeding six months. Confirm Central or State jurisdiction and the rules applicable on the exit date. The selector provides a comparison of that rounding with a pro-rata arithmetic estimate; it does not resolve legal applicability.
| Your situation | Service check | Calculator treatment |
|---|---|---|
| Regular resignation / retirement | Ordinarily 5 continuous years | Whole years, adding one for a remainder exceeding 6 months |
| Direct fixed-term contract expires | One year under the contract, per Ministry FAQ | Choose pro-rata illustration or the Central Rules subsequent-service rounding convention |
| Contractor-supplied labour | Do not assume the one-year FTE rule | Use regular mode for the ordinary check; confirm the employer and service records |
| Death | Five-year condition waived | Pro-rata estimate for nominee / heirs |
| Disablement due to accident / disease | Five-year condition waived | Rounded-service estimate; re-employment at reduced wages needs separate review |
| Qualifying working journalist | Special 3-year requirement | Rounded-service estimate; occupation status must be verified |
| Government pension rules / seasonal / piece-rated | Separate provisions | Outside this monthly-rated model |
Sources: Code section 53; Ministry FAQs, questions 10–13; March clarification, questions 10, 14 and 16; Central rule 33. A specific four-years-and-240-days claim requires individual verification.
Start with the right input
Your gratuity wage base needs a payroll check.
A correct service factor cannot fix the wrong wage input. Ask for the monthly base used in the employer’s calculation sheet.
Verify included components
Basic pay, dearness allowance and retaining allowance are included wage components under the current framework. Use the applicable last-drawn base.
Check the 50% mechanism
Specified excluded components can be added back when they exceed the statutory threshold. Annual CTC is not a substitute for that component-level check.
Enter the payroll figure
This calculator accepts the confirmed monthly gratuity wages. It does not reconstruct a wage base from a CTC percentage or estimate it from take-home pay.
Review the Ministry wage-definition FAQ and the March component clarifications with payroll. If reduced wages follow disablement, a single final base may not represent the required calculation.
Arithmetic you can inspect
The 15/26 formula, with the service rule shown.
The monthly-rated formula converts monthly wages to a 15-day benefit for each service factor. Payment limits and eligibility are checked separately.
Standard ceiling-limited estimate = smaller of uncapped estimate and ₹20,00,000
Ordinary rounding
10 years + 6 months + 0 days → factor 10.
10 years + 6 months + 1 day → factor 11.
10
years + 7 months → factor 11.
The additional year changes the formula amount; it does not prove entitlement for an exit before the minimum service condition is met.
Pro-rata convention
For death and the fixed-term pro-rata option, this estimate uses years + months ÷ 12 + days ÷ 365. Example: 1 year + 6 months → factor 1.5.
The fractional year convention is an estimate. For Central Rules fixed-term rounding, the tool instead uses whole years plus one where the subsequent remainder exceeds six months. Confirm the required basis with the employer.
Four worked examples
Compare the service boundary, pro-rata factor and ceiling
Each example loads its own inputs and calculates the result. Coverage stays unconfirmed; none of these amounts is an entitlement or tax decision.
Example 01
Ten completed years
₹50,000 monthly gratuity wages × 15 ÷ 26 × 10, below the standard ceiling.
Example 02
One day beyond six additional months
Ten years, six months and one day uses factor 11. This rounding is separate from the minimum-service check.
Example 03
A fixed-term pro-rata comparison
At exactly 1 year 6 months, this disclosed pro-rata arithmetic differs from the Central Rules rounded factor of 1. Confirm the applicable convention.
Example 04
A formula amount above the ceiling
₹2 lakh monthly wages and 20 years exceed the model’s standard payment ceiling. Better contractual terms and tax treatment need separate review.
Use the tool
From payslip to a reviewable estimate.
Choose your exit case
Select the employment situation and indicate whether employer coverage has been confirmed. Direct fixed-term employment is different from contract labour.
Enter wages and service
Use the payroll-verified last-drawn monthly base and whole years, months and remaining days from continuous-service records.
Reconcile the breakdown
Check the factor, uncapped formula and ceiling-limited estimate. Download the report to discuss differences with HR, then review tax treatment separately.
Payment & income tax
₹20 lakh is not an automatic tax-free label.
The calculator’s ceiling limits a standard statutory payment estimate. Income-tax relief has its own conditions and legal provisions.
| Category | What to check | Official reference |
|---|---|---|
| Qualifying government / defence gratuity | Specified pension-rule receipts have full relief; a PSU job alone does not establish that category. | Income-tax Act, 2025 · section 19, entries 3–4 |
| Gratuity under the statutory payment provisions | Actual receipt and statutory calculation limits matter. Do not classify every receipt below ₹20 lakh as fully relieved. | Section 19, entry 5; verify current legal application to the receipt |
| Other employee gratuity | Actual receipt, notified limit and half-month average salary per completed year; relevant earlier relief reduces the available limit. | Section 19, entry 6 and subsection (2) |
| Widow, children or dependants on death | The eligible gratuity amount is linked to the section 19 calculation; it is not a blanket exclusion for every death receipt. | Schedule III, entry 38 |
Read section 19 of the Income-tax Act, 2025 and Schedule III. The CBDT ₹20 lakh FAQ explains earlier notifications under the 1961 Act. Confirm the tax-year law and receipt classification with a tax professional rather than treating the gratuity wage base as a universal tax-salary definition.
Before accepting the settlement
Ask for the inputs behind the number.
A difference may come from service records, wages, the employment category or contract terms. Compare these before assuming the arithmetic is wrong.
Documents to compare
- Last payslip and the payroll gratuity wage-base calculation.
- Joining, service-continuity and final working-day records.
- Written fixed-term contract, if that category is selected.
- Employer calculation sheet, payout advice and tax treatment.
- Any award, agreement or contract providing better gratuity terms.
Timing and unresolved differences
The Ministry’s employer handbook states payment within 30 days after gratuity becomes payable. The trigger is the payable date, not the date on which this calculator is used.
Ask the employer to explain a discrepancy in writing. If it remains unresolved, check the appropriate labour authority and applicable procedure; this report is supporting arithmetic, not a claim form.
See the official employer handbook.
Place it in your exit plan
Gratuity, provident fund and pension do different jobs.
Keep these amounts separate when estimating money available after employment ends.
Gratuity
A service-linked employer payment on a qualifying event. This tool estimates its monthly-rated arithmetic; it does not show an investment account.
Provident fund
A separate contribution-based retirement arrangement. Use the relevant statement for balances and apply the scheme’s withdrawal and tax conditions.
Pension
A separate benefit or retirement-income arrangement under its own scheme. Do not treat a gratuity lump sum as confirmation of pension eligibility or monthly income.
Practical use cases
Check a decision or a settlement.
Planning a resignation
Compare service lengths at the same wages and identify the rounding boundary. Confirm the actual final date and eligibility before making an exit decision.
Preparing for retirement
Use the gross estimate as one part of an exit budget. Keep payment timing, tax, pension and provident-fund proceeds as separate items.
Reviewing a fixed-term payout
Check that the contract is directly with the employer, the one-year requirement is met and the pro-rata calculation convention agrees with payroll.
Have your wage base and service details?
Return to the calculator and build an estimate you can compare with the employer’s worksheet.
Review my gratuity estimateQuestions about this estimate
Gratuity calculator FAQs
Does the calculator confirm my legal entitlement?
No. It checks the entered service against a selected threshold and estimates a monthly-rated formula. Employer coverage, continuous-service records, the exit event, applicable rules and any forfeiture or better contractual terms still need verification.
Does every employee qualify after one year?
No. The Ministry’s March 2026 clarification identifies directly engaged fixed-term employees who have completed one year under their contract. Contractor-supplied labour is a different category; do not choose fixed-term solely because your job is called contractual.
What happens at exactly six additional months?
In the ordinary rounded-service mode, exactly six months does not add a year. Six months plus at least one additional day does. This rounding calculates the formula factor; it does not turn service below five years into confirmed eligibility.
What about four years and 240 days?
This tool does not automatically approve that claim. Continuous-service provisions and relevant decisions can affect individual cases. Ask HR or the competent labour authority to verify the applicable legal position and working-day records.
Should I enter basic pay, gross salary or CTC?
Use the last-drawn monthly wage base verified for gratuity. Under the current Codes, basic pay, DA and retaining allowance are included components, and specified exclusions can trigger an add-back. The wage base is not automatically gross salary or 50% of every CTC package.
How does the pro-rata calculation work here?
For death and the fixed-term pro-rata option, the tool models service as years + months ÷ 12 + extra days ÷ 365, then applies the 15/26 monthly factor. This is a disclosed arithmetic convention for an estimate. The Central Rules fixed-term option instead rounds a subsequent remainder exceeding six months. Confirm jurisdiction and the required settlement convention with the employer.
Does the chart show money accumulated in an account?
No. Each point repeats the selected formula at a different service length using the same last-drawn wages. It is a sensitivity illustration, not an employer liability ledger, an investment balance or a history of your salary.
Is the result tax-free below ₹20 lakh?
Not automatically. Payment entitlement and income-tax relief are separate. Category, applicable tax-year law, eligible salary, actual receipt and relevant earlier claims can affect the tax treatment. Review the tax section and the official Income Tax Department links.
Is gratuity split into old-law and new-law service?
The Ministry’s March 2026 FAQ addresses exit events on or after 21 November 2025 using last-drawn wages under the Code on Social Security, 2020. This calculator uses the current framework for the entire entered service; it does not create two service buckets.
Are the entered salary details saved?
This calculator script processes the inputs in the browser and provides downloads when requested. It does not send salary values, use browser storage or load a calculation API. Fonts load from Google; the WordPress website may separately run analytics or other plugins.
Verify & continue
Official references & related tools
Government sources support the rule notes. Related calculators address separate salary and retirement questions.
Official sources
Code on Social Security, 2020 · Gazette textSections 2(88), 53–56 · monthly formula and special cases Social Security (Central) Rules, 2026G.S.R. 344(E), 8 May 2026 · rule 33 and gratuity forms Labour Codes: Government commencement announcementEffective 21 November 2025 · PIB Ministry of Labour: Labour Codes FAQsDated 30 December 2025 · gratuity questions 8–13 Ministry of Labour: additional FAQs16 March 2026 · wages, fixed-term service and transition Employer compliance handbookCentral Government sphere · gratuity and payment timing Income-tax Act, 2025: section 19Gratuity deductions · table entries 3–6 CBDT: gratuity exemption limit FAQ₹20 lakh notifications under the 1961 Act Income-tax Act, 2025: Schedule IIIEntry 38 · qualifying receipts by dependants on deathRelated calculators
Rule notes reviewed on 15 October 2026. Sources and employer-specific terms should be checked again before a settlement is finalised.