What is the gratuity calculation formula?

For employers covered by the Gratuity Act (10 or more employees): Gratuity = 15 × last drawn monthly basic + DA × years of service ÷ 26. Service of more than 6 months in the final year counts as a full year. For employers not covered, the divisor is 30 and only completed years count.

How much gratuity will I get for 5 years?

With last drawn basic + DA of ₹30,000, gratuity for 5 years is 15 × 30,000 × 5 ÷ 26 = ₹86,538. At ₹50,000 it is ₹1,44,231.

Is gratuity paid before 5 years?

For permanent employees, gratuity needs 5 years of continuous service, except on death or disablement. Under the Code on Social Security, 2020 (in force since 21 November 2025), fixed-term employees get pro-rata gratuity after 1 year of service.

How does the new Labour Code change gratuity?

The Labour Codes define wages as at least 50% of total pay. If your basic + DA was below half of your gross, the wage used for gratuity can rise to 50% of gross, which increases the payout. Check how your employer applies it - official FAQs on what counts in total pay are still being clarified.

For private-sector employees, gratuity is tax-free up to ₹20 lakh in a lifetime. Anything above that is taxed as salary. Government employees' gratuity is fully exempt.

When is gratuity paid?

The employer must pay within 30 days of it becoming payable - on resignation after eligibility, retirement, death, or disablement. Delays attract simple interest.

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Gratuity calculator India (2026)

Gratuity = 15 × last drawn basic + DA × years of service ÷ 26. Example: ₹40,000 basic + DA and 7 years gives ₹1,61,538. Permanent employees qualify after 5 years; fixed-term employees get pro-rata gratuity after 1 year. Up to ₹20 lakh is tax-free.

Includes the Labour Code rule that wages are at least 50% of pay (in force since 21 November 2025).

Calculate your gratuity

Estimated gratuity

₹1,61,538

Eligible: 5 or more years of continuous service.

Formula: 15 × ₹40,000 × 7 ÷ 26
Years counted: 7
Tax-free (up to ₹20 lakh): ₹1,61,538
Taxable: ₹0

Quick reference

Gratuity table by salary and years of service

Gratuity amount by last drawn basic + DA and years of service (covered employer)
Basic + DA / month	5 yrs	7 yrs	10 yrs	15 yrs	20 yrs	25 yrs
₹15,000	₹43,269	₹60,577	₹86,538	₹1,29,808	₹1,73,077	₹2,16,346
₹20,000	₹57,692	₹80,769	₹1,15,385	₹1,73,077	₹2,30,769	₹2,88,462
₹25,000	₹72,115	₹1,00,962	₹1,44,231	₹2,16,346	₹2,88,462	₹3,60,577
₹30,000	₹86,538	₹1,21,154	₹1,73,077	₹2,59,615	₹3,46,154	₹4,32,692
₹40,000	₹1,15,385	₹1,61,538	₹2,30,769	₹3,46,154	₹4,61,538	₹5,76,923
₹50,000	₹1,44,231	₹2,01,923	₹2,88,462	₹4,32,692	₹5,76,923	₹7,21,154
₹75,000	₹2,16,346	₹3,02,885	₹4,32,692	₹6,49,038	₹8,65,385	₹10,81,731
₹1,00,000	₹2,88,462	₹4,03,846	₹5,76,923	₹8,65,385	₹11,53,846	₹14,42,308

Employer covered by the Act (÷ 26). * Capped at the ₹20 lakh statutory limit.

How it works

Gratuity rules that change the number

Why ÷ 26: the Act treats a month as 26 working days, so 15 days' wages = monthly wage × 15 ÷ 26.
Rounding: for covered employers, more than 6 months in the last year counts as a full year - 7 years 7 months is 8 years, 7 years 5 months is 7.
Wage: last drawn basic + DA (plus retaining allowance). Under the Labour Codes it cannot be less than 50% of total pay.
Fixed-term contracts: pro-rata gratuity after 1 year - an 18-month contract earns gratuity for 1.5 years.
Cap and tax: the statutory maximum is ₹20 lakh, which is also the lifetime tax-free limit for private-sector employees.
CTC vs payout: the 4.81% "gratuity" line in your CTC is the employer's monthly provision (15 ÷ 26 ÷ 12). You receive it only on eligibility.

See how gratuity affects take-home with the in-hand salary calculator, and read EPF, ESI, and gratuity explained. Settling leave too? Use the leave encashment calculator.

Got questions?

Gratuity: FAQs

Formula, eligibility, Labour Code, and tax.

For employers covered by the Gratuity Act (10 or more employees): Gratuity = 15 × last drawn monthly basic + DA × years of service ÷ 26. Service of more than 6 months in the final year counts as a full year. For employers not covered, the divisor is 30 and only completed years count.
With last drawn basic + DA of ₹30,000, gratuity for 5 years is 15 × 30,000 × 5 ÷ 26 = ₹86,538. At ₹50,000 it is ₹1,44,231.
For permanent employees, gratuity needs 5 years of continuous service, except on death or disablement. Under the Code on Social Security, 2020 (in force since 21 November 2025), fixed-term employees get pro-rata gratuity after 1 year of service.
The Labour Codes define wages as at least 50% of total pay. If your basic + DA was below half of your gross, the wage used for gratuity can rise to 50% of gross, which increases the payout. Check how your employer applies it - official FAQs on what counts in total pay are still being clarified.
For private-sector employees, gratuity is tax-free up to ₹20 lakh in a lifetime. Anything above that is taxed as salary. Government employees' gratuity is fully exempt.
The employer must pay within 30 days of it becoming payable - on resignation after eligibility, retirement, death, or disablement. Delays attract simple interest.

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Gratuity calculator India (2026)

Includes the Labour Code rule that wages are at least 50% of pay (in force since 21 November 2025).

Calculate your gratuity

Estimated gratuity

₹1,61,538

Eligible: 5 or more years of continuous service.

Formula: 15 × ₹40,000 × 7 ÷ 26
Years counted: 7
Tax-free (up to ₹20 lakh): ₹1,61,538
Taxable: ₹0

Gratuity table by salary and years of service

Gratuity amount by last drawn basic + DA and years of service (covered employer)
Basic + DA / month	5 yrs	7 yrs	10 yrs	15 yrs	20 yrs	25 yrs
₹15,000	₹43,269	₹60,577	₹86,538	₹1,29,808	₹1,73,077	₹2,16,346
₹20,000	₹57,692	₹80,769	₹1,15,385	₹1,73,077	₹2,30,769	₹2,88,462
₹25,000	₹72,115	₹1,00,962	₹1,44,231	₹2,16,346	₹2,88,462	₹3,60,577
₹30,000	₹86,538	₹1,21,154	₹1,73,077	₹2,59,615	₹3,46,154	₹4,32,692
₹40,000	₹1,15,385	₹1,61,538	₹2,30,769	₹3,46,154	₹4,61,538	₹5,76,923
₹50,000	₹1,44,231	₹2,01,923	₹2,88,462	₹4,32,692	₹5,76,923	₹7,21,154
₹75,000	₹2,16,346	₹3,02,885	₹4,32,692	₹6,49,038	₹8,65,385	₹10,81,731
₹1,00,000	₹2,88,462	₹4,03,846	₹5,76,923	₹8,65,385	₹11,53,846	₹14,42,308

Employer covered by the Act (÷ 26). * Capped at the ₹20 lakh statutory limit.

Gratuity rules that change the number

Why ÷ 26: the Act treats a month as 26 working days, so 15 days' wages = monthly wage × 15 ÷ 26.
Rounding: for covered employers, more than 6 months in the last year counts as a full year - 7 years 7 months is 8 years, 7 years 5 months is 7.
Wage: last drawn basic + DA (plus retaining allowance). Under the Labour Codes it cannot be less than 50% of total pay.
Fixed-term contracts: pro-rata gratuity after 1 year - an 18-month contract earns gratuity for 1.5 years.
Cap and tax: the statutory maximum is ₹20 lakh, which is also the lifetime tax-free limit for private-sector employees.
CTC vs payout: the 4.81% "gratuity" line in your CTC is the employer's monthly provision (15 ÷ 26 ÷ 12). You receive it only on eligibility.

See how gratuity affects take-home with the in-hand salary calculator, and read EPF, ESI, and gratuity explained. Settling leave too? Use the leave encashment calculator.

Gratuity calculator India (2026)

Calculate your gratuity

Gratuity table by salary and years of service

Gratuity rules that change the number

Gratuity: FAQs

What is the gratuity calculation formula?

How much gratuity will I get for 5 years?

Is gratuity paid before 5 years?

How does the new Labour Code change gratuity?

Is gratuity taxable?

When is gratuity paid?

Gratuity calculator India (2026)

Calculate your gratuity

Gratuity table by salary and years of service

Gratuity rules that change the number

Gratuity: FAQs

What is the gratuity calculation formula?

How much gratuity will I get for 5 years?

Is gratuity paid before 5 years?

How does the new Labour Code change gratuity?

Is gratuity taxable?

When is gratuity paid?