Gratuity calculator
Enter your last drawn wages and length of service. You see the gratuity under the Code on Social Security, 2020, how your service is counted and whether you are eligible yet.
Formula per section 53 of the Code on Social Security, 2020 · Reviewed by Regikart's CA team · 25 October 2026
Basic pay plus dearness allowance and retaining allowance. Under the labour codes, if allowances left out of wages exceed half of your pay, the excess is added back.
Gratuity: ₹2,59,615
15 ÷ 26 × ₹50,000 × 9 years
| Service counted | 9 years (8 years 7 months rounded up) |
| Formula amount | ₹2,59,615 |
| Ceiling | ₹20,00,000 |
| Gratuity payable | ₹2,59,615 |
Under section 53 of the Code on Social Security, 2020 (in force from 21 November 2025): 15 days' wages for each completed year, a day's wage being monthly wages ÷ 26, and a part year of more than six months counted as a full year. The ₹20 lakh ceiling is the limit notified in 2018; we confirm the current figure if your amount is near it. A fixed-term contract that ends before a full year pays pro rata, and your employer may pay more under its own scheme.
Employer setting up gratuity, or employee checking a payout?
Our team handles labour-code compliance and payroll for employers, and checks the tax on gratuity for employees.
Or send this on WhatsAppA worked example
Monthly wages of ₹52,000 and service of 10 years 7 months. The seven months exceed six, so service counts as 11 years. Gratuity = 15 ÷ 26 × ₹52,000 × 11 = ₹3,30,000. With 10 years 6 months it would be 10 years, or ₹3,00,000.
For employers
The labour codes widened who gets gratuity (fixed-term staff after one year) and what counts as wages. Review salary structures where basic pay is low, and provide for gratuity in the accounts. Our payroll services and labour law compliance teams handle both.
Questions
How is gratuity calculated?
15 days' wages for every completed year of service, where a day's wage is the monthly wage divided by 26. In formula terms: 15 ÷ 26 × last drawn monthly wages × years of service.
How is a part year counted?
A part year of more than six months counts as a full year. So 8 years 7 months counts as 9 years, while 8 years 6 months counts as 8.
When does an employee become eligible?
After five years of continuous service, except on death or disablement. Under the Code on Social Security, 2020, in force from 21 November 2025, a fixed-term employee is eligible after one year.
What counts as wages?
Basic pay, dearness allowance and retaining allowance. Under the labour codes, if the allowances excluded from wages add up to more than half of total pay, the excess is treated as wages, which can raise gratuity for employees with a low basic.
Is there a maximum?
The ceiling of ₹20 lakh was notified in 2018 and continues to be applied. Employers can pay more under their own scheme. We confirm the current limit if your amount is close to it.
Is gratuity taxable?
Gratuity of government employees is exempt. For other employees covered by the gratuity law, the amount within the statutory formula and limit is exempt and any excess is taxed as salary. We check the exempt amount when we file your return.