About this calculator
Enter your last basic pay plus dearness allowance, your length of service and your type of employment. If you also enter your total monthly pay, the calculator applies the new 50% wage rule, which can raise the gratuity for many employees.
How to use it
- Enter your last monthly basic pay plus DA.
- Optionally enter your total monthly pay to apply the 50% wage rule.
- Enter your years of service and any extra months.
- Choose permanent or fixed-term employment and read the result.
The formula
- wages
- last drawn basic pay + dearness allowance (+ retaining allowance), and at least half of total pay under the 50% rule
- 15
- 15 days’ wages for each year of service
- 26
- working days in a month, so wages ÷ 26 is one day’s wage
- years
- completed years, plus one more if the extra part is more than six months
Worked example
Basic + DA of ₹50,000, 10 years and 7 months
- 7 extra months is more than six, so the service counts as 11 years.
- Gratuity = 50,000 × 15 × 11 ÷ 26 = ₹3,17,308.
- With basic + DA of ₹30,000 out of ₹80,000 total pay, the 50% rule raises wages to ₹40,000: for 10 years that gives ₹2,30,769 instead of ₹1,73,077.
What the result means
Permanent employees become eligible after five years of continuous service, and fixed-term employees after one year. On death or disablement, gratuity is payable even before five years.
Under the new Labour Codes, allowances left out of wages (such as HRA and conveyance) cannot be more than half of total pay. Anything above half is added back to wages, which is why gratuity has gone up for many people with a low basic salary.
Assumptions
- Your employer is covered by the Code on Social Security, 2020.
- The wages entered are your last drawn monthly wages.
- Service is continuous.
Limitations
- Employers not covered by the law may pay gratuity under their own policy, sometimes with a 30-day month instead of 26.
- The tax-free limit (₹20 lakh for most private-sector employees under the rules in force) is shown as a note; tax on any excess is not calculated.
- Disputes about what counts as continuous service or wages are decided under the law and your employment terms, not by a calculator.
Frequently asked questions
How is gratuity calculated?
Last drawn wages × 15 × years of service ÷ 26. Wages means basic pay plus DA, and under the new rules at least half of your total pay.
Do I get gratuity before 5 years?
Permanent employees generally need five years of continuous service. Fixed-term employees qualify after one year. On death or disablement, the time limit does not apply.
Does 4 years and 7 months count as 5 years?
For eligibility, the law requires five years of continuous service; courts have treated some cases with 240 working days in the fifth year as qualifying. For the amount, a part year of more than six months counts as a full year.
Is gratuity taxable?
Gratuity up to the limit in force, ₹20 lakh for most private-sector employees, has been tax-free. Check the current tax rules for your year.
For information only. Tax results depend on the law in force, the tax period and your circumstances, and rates are revised from time to time. This is not tax advice. Please confirm the applicable rate and treatment with a qualified professional or the official notifications.
Last reviewed on 1 October 2026. Found a mistake? Tell us.