Gratuity calculator — 2026 Labour Code rules
How much gratuity you're owed when you leave, and how much of it is tax-free. Updated for the Labour Codes in force since 21 November 2025: fixed-term employees now qualify after just 1 year, and the wage base must be at least 50% of CTC.
Quick reference — gratuity at common salaries (6 years, covered employer)
| Basic + DA / month | Gratuity (6 yrs) | Gratuity (10 yrs) |
|---|---|---|
| ₹25,000 | ₹86,538 | ₹1,44,231 |
| ₹40,000 | ₹1,38,462 | ₹2,30,769 |
| ₹60,000 | ₹2,07,692 | ₹3,46,154 |
| ₹1,00,000 | ₹3,46,154 | ₹5,76,923 |
The maths behind this calculator is open source and tested — try it in the interactive reference, where the edge cases most calculators get wrong are worked through with real numbers, or read the source on GitHub.
FAQ
Do I need 5 years of service to get gratuity?
For permanent employees, yes — 5 years of continuous service (4 years 240 days counts in many rulings, and the 5-year rule is waived entirely on death or disablement). Since 21 November 2025, fixed-term employees qualify after just 1 year, pro-rata to their contract period.
What exactly is the gratuity formula?
For employers covered under the Payment of Gratuity Act (10 or more employees): last drawn basic + DA × 15 ÷ 26 × years of service, where more than six months of a year rounds up to a full year. For non-covered employers it's half a month's average salary per completed year (15 ÷ 30, no rounding up).
How much gratuity is tax-free?
Government employees: fully exempt. Private employees: exempt up to the least of the actual amount received, the statutory formula amount, and ₹20 lakh. The ₹20 lakh is a lifetime cap across every employer you ever receive gratuity from — exemption you've already used reduces what's left. Anything above is taxed as salary.
What did the 2025-26 Labour Codes change?
Three things matter: fixed-term employees get gratuity after 1 year instead of 5; the wage base used in the formula must be at least 50% of your total pay (so structures with a tiny basic now produce bigger gratuity); and the formula itself (15/26) is unchanged. The changes apply from 21 November 2025.
Is gratuity part of my CTC?
Many companies include a gratuity provision (typically 4.81% of basic) in your CTC. It's still only payable when you actually qualify and leave — check your in-hand salary and full-and-final settlement to see what actually reaches your account.