Gratuity Calculator
Work out the gratuity due when you leave a job, under the Code on Social Security that replaced the Payment of Gratuity Act in November 2025.
Basic salary plus dearness allowance, as on your last payslip.
Your gross monthly pay. If basic + DA is under half of it, the 50% wage rule raises the wages used.
Gratuity payable
₹1,84,615
- Wages used
- ₹40,000
- Service counted
- 8 years
- Formula
- 15 × wages × years ÷ 26
- Gratuity
- ₹1,84,615
More than six months in the last year counts as a full year.
How gratuity is calculated
gratuity = 15 × last drawn monthly wages × years of service ÷ 26
Wages are basic pay plus dearness allowance. The 15 is fifteen days’ wages for every year worked, and 26 is the number of working days the law assumes in a month.
Years of service count a final part year of more than six months as a full year: 7 years 8 months counts as 8, while 7 years 6 months counts as 7.
Example. Basic + DA of ₹40,000 a month and 7 years 8 months of service: 15 × 40,000 × 8 ÷ 26 = ₹1,84,615.
What changed in November 2025. The Code on Social Security, 2020 replaced the Payment of Gratuity Act on 21 November 2025. The formula is the same, but two rules are new: wages must be at least half of total pay (allowances above 50% are added back), and fixed-term employees become eligible after one year instead of five. The ceiling stays at ₹20 lakh.
This calculator gives an estimate for planning. Your employer’s policy or contract may pay more; for a disputed claim, check with your HR team or a labour law adviser.
How is gratuity calculated?
Gratuity = 15 × last drawn monthly wages × years of service ÷ 26. Wages are basic pay plus dearness allowance (and retaining allowance, if any). A part year of more than six months counts as a full year. For ₹40,000 a month and 7 years 8 months of service: 15 × 40,000 × 8 ÷ 26 = ₹1,84,615.
How many years do I need to work to get gratuity?
Five years of continuous service with the same employer. Fixed-term employees qualify after one year under the Code on Social Security. The minimum does not apply when employment ends because of death or disablement; then gratuity is paid to the employee or their nominee.
What is the 50% wage rule?
Under the new labour codes, if allowances left out of “wages” (such as HRA and conveyance) add up to more than half of your total pay, the excess is added back to wages. In effect, gratuity is worked out on at least 50% of your total pay. Enter your total monthly pay in the calculator to apply it.
What is the maximum gratuity I can get?
The law caps gratuity at ₹20 lakh. An employer can pay more under an employment contract or agreement, but the statutory amount stops at the ceiling.
Is gratuity taxable?
For private-sector employees, gratuity up to ₹20 lakh is tax-free. That limit applies across your whole working life, not per employer. Gratuity paid to government employees is fully exempt.
What if my employer is not covered by the law?
The gratuity law applies to establishments with 10 or more employees. Smaller employers that pay gratuity voluntarily commonly use 15 days’ pay based on a 30-day month, for completed years only. Choose “Not covered” in the calculator to use that formula.
Let zerp do this for you.
zerp’s HR and payroll module tracks every employee’s service and gratuity liability, and settles it in the final payslip.
- 1We review your brief
- 2A short discovery call
- 3A clear, itemised proposal
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