Gratuity Calculator India

Gratuity is a lump sum your employer pays when you leave after qualifying service. It works out to 15 days’ wages for every year of service counted.

Gratuity = last drawn monthly wages × 15 ÷ 26 × years counted. The law treats a month as 26 working days. For example, wages of ₹40,000 and 10 years counted give ₹40,000 × 15 ÷ 26 × 10 = ₹2,30,769.

Permanent employees need 5 years of continuous service. Under the Code on Social Security, 2020 (in force from 21 November 2025), fixed-term employees qualify after 1 year of service under the contract when it ends. There is no minimum service on death or disablement.

Yes. Resignation is one of the events on which gratuity becomes payable, as long as you have completed 5 years of continuous service (or 1 year if you are on a fixed-term contract that has ended).

Wages are Basic pay + Dearness Allowance + retaining allowance. For jobs ending on or after 21 November 2025, if items such as HRA, other allowances, bonus and employer PF add up to more than half of your total pay, the excess is added back to wages. In effect, wages become at least half of your total pay.

For permanent employees, a part year of more than 6 months counts as a full year, so 7 years 7 months counts as 8 years, but 7 years 6 months counts as 7. For fixed-term employees, a part year of 6 months or more counts as a full year (Rule 33 of the Social Security (Central) Rules, 2026).

Yes. The legal ceiling is ₹20 lakh. Your employer can pay more under your contract, an agreement or a settlement, but any amount above your tax-free limit is taxed as salary.

Central and state government employees get their entire gratuity tax-free. For others, the tax-free amount is the lowest of the gratuity received, the amount worked out under the law, and ₹20 lakh minus any gratuity exemption already used in earlier jobs. From 1 April 2026 this is in Section 19 of the Income-tax Act, 2025; earlier it was Section 10(10) of the Income-tax Act, 1961.

Some High Courts have held that 4 years plus 240 days worked in the fifth year (190 days for a 5-day week) counts as 5 years of continuous service. This comes from court rulings, not the law itself, and courts have differed, so it isn’t guaranteed.

Apply in Form 4, normally within 30 days of gratuity becoming payable. Your employer must reply in Form 5 within 15 days and pay by the 30th day after receiving your application. Late payment attracts simple interest at the government-notified rate.

You have no legal right to gratuity, though some employers pay it under their own policy. If they do, the tax-free part is limited to half a month’s average salary (over the last 10 months) for each completed year, within the ₹20 lakh lifetime limit. Under the old Act, establishments with 10 or more employees were covered.