Gratuity calculator: what you'll get, and the tax on it
Enter your basic salary and years of service. See your gratuity under the new labour codes, and the part that's tax-free.
- New labour code rules
- Fixed-term rules included
- Free, no sign-up
Leaving your job? Check before you sign
Our experts check your gratuity, leave encashment and notice pay in your full and final settlement, and the tax on each.
Questions people often ask
I've worked 4 years and 8 months. Do I get gratuity?
Usually not yet, since the law needs 5 years. Some courts have counted 4 years and 240 days as enough, so it's worth asking.
My employer paid more than the formula. Is all of it tax-free?
Only up to the lowest of the formula amount and ₹20 lakh. The rest is added to your salary and taxed.
How gratuity works
Most private employees get 15 days' wages for every year they've worked, once they've completed 5 years.
- Monthly wages × 15 ÷ 26 × years. 26 is the number of working days in a month.
- A part year over six months counts as a full year. 8 years 7 months counts as 9.
- Capped at ₹20 lakh by law, though your employer can pay more.
Tax-free part
| Your employer | Tax-free up to |
|---|---|
| Private, covered by the gratuity law | Least of the formula, the amount paid and ₹20 lakh (less tax-free gratuity from earlier jobs) |
| Private, not covered | Least of ½ month's average pay × years, the amount paid and ₹20 lakh |
| Central or state government (not PSUs) | All of it |
Example: basic ₹60,000 a month and 8 years 7 months of service gives 60,000 × 15 ÷ 26 × 9 = ₹3,11,538, all tax-free.
Last reviewed 8 October 2026. Payout rules come from the labour code and pension rules, and the tax-free limit from the Income-tax Act.
- Code on Social Security, 2020, section 53 Ministry of Labour and Employment
- Taxability of retirement benefits Income Tax Department
- Labour codes: frequently asked questions (March 2026) Ministry of Labour and Employment
- Central Civil Services (Pension) Rules, 2021 Department of Pension and Pensioners' Welfare
Common questions
How is gratuity calculated?
For most private employees: 15 days' wages for each year of service, worked out as monthly wages × 15 ÷ 26 × years. A part year of more than six months counts as a full year. The law caps it at ₹20 lakh, but an employer can pay more.
Who is eligible for gratuity?
Employees with at least 5 years of continuous service with the same employer, when they resign, retire or reach superannuation. The 5 years aren't needed if you leave because of disablement, or for death. Fixed-term employees qualify after 1 year of service under their contract.
What changed under the new labour codes?
From 21 November 2025, gratuity is governed by the Code on Social Security, 2020. Fixed-term employees now get gratuity pro rata after one year. Wages for gratuity must be at least half your total pay, so if your basic is low, your gratuity can go up. For anyone leaving on or after 21 November 2025, all of their service is paid at the wages last drawn under the new rules.
How much gratuity is tax-free?
For private employees covered by the law, the least of: the gratuity you got, 15/26 × last basic + DA × years of service, and ₹20 lakh minus any tax-free gratuity you got from earlier jobs. Central and state government employees pay no tax on gratuity; employees of PSUs and statutory corporations use the private rules.
Is gratuity tax-free under the new regime too?
Yes. The gratuity exemption is the same under both regimes.
Does 4 years and 240 days count as 5 years?
The law says 5 years. Some High Courts have held that 4 years and 240 days of work in the fifth year is enough, but employers don't always accept it. It's worth asking an expert with your dates.
How long does my employer have to pay gratuity?
Within 30 days of it becoming due. If they pay late, they owe you simple interest for the delay.
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