Gratuity Calculator — New Labour Code (15/26 Formula)
Work out gratuity under the Social Security Code, including fixed-term staff, the 50% wages rule and the tax-free limit.
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Calculate gratuity under the Code on Social Security, 2020, which replaced the Payment of Gratuity Act from 21 November 2025. It handles permanent employees (5 years’ service), fixed-term staff (1 year), employers not covered by the Code and government employees, and shows how much is tax-free (up to ₹20 lakh for non-government employees).
The new “wages” rule is built in: if your allowances are more than half your pay, the excess is counted as wages.
Step by step
- Choose employment type: Pick permanent, fixed-term, not covered or government under Employment type.
- Enter your wages: Type Last drawn monthly basic + DA. Optionally add Total monthly pay to apply the 50% rule.
- Enter service: Fill in Years of service and Extra months — over six extra months counts as a full year.
- Check the tax-free part: Optionally enter Gratuity actually received to split it into tax-free and taxable.
Handy for
Resigning or retiring
Know what you should receive before your full and final settlement.
Contract staff
Fixed-term employees can now claim gratuity after one year.
Tax planning
See how much of a payout is taxable.
HR checks
Verify gratuity provisions in payroll.
Good to know
Only basic + DA count as wages, unless allowances exceed half your pay.
The ₹20 lakh tax-free limit is lifetime, across employers.
Government employees’ gratuity is fully tax-exempt.
Questions
What is the gratuity formula?
Last wages × 15 × years of service ÷ 26 for covered employers.
Who is eligible?
Permanent employees after 5 years of continuous service; fixed-term employees after 1 year. Death or disability removes the minimum.
Is 4 years 7 months counted as 5 years?
Service is rounded up only once you are eligible. The 5-year minimum itself needs continuous service of 5 years (courts have accepted 4 years and 240 days in some cases — check with HR).
Can I rely on this for filing or investing?
Use it for planning. Rules, rates and your own circumstances matter — confirm with official sources or a qualified adviser before acting.
Further reading
- CTC to In-Hand Salary: What Gets Deducted and Why — Work out monthly take-home pay from CTC: employer PF, gratuity, professional tax and TDS explained, with a ₹12 lakh CTC worked example and payslip checks.
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