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Gratuity calculator for employers and employees.
From the last basic pay and the years of service: the gratuity due, how much of it is tax-free, and whether the employee is eligible yet.
Salary and service
Only counts when they are more than half of total pay (Code on Social Security, 2020).
Employer covered by the gratuity law (10 or more staff)?
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Gratuity
₹1,61,538
7 years counted
Tax-free
₹1,61,538
Up to ₹20,00,000
Taxable
₹0
Nothing taxable
How it is worked out
- Wages for gratuityBasic pay + DA
- ₹40,000
- FormulaWages x 15 x years / 26 (a part-year over six months counts as a year)
- 7 yrs
Gratuity₹1,61,538
Paid within 30 days
The employer must pay gratuity within 30 days of it becoming due; after that, simple interest is payable. The tax-free limit of ₹20,00,000 is for the whole working life, across employers.How it is worked out
- Covered employers (10 or more employees): last wages x 15 x years of service / 26. A final part-year of more than six months counts as a full year.
- Wages: basic pay + DA. Under the Code on Social Security, 2020 (in force from 21 November 2025), allowances above half of total pay are added back to wages.
- Eligible after five years of continuous service, or one year for a fixed-term employee; on death or disablement no minimum applies.
- Employers not covered by the law: half a month's wages (30 days) for each completed year.
- Tax: for private-sector employees gratuity is tax-free up to Rs 20 lakh over the whole working life; the rest is taxed as salary.
An estimate from the general rules as notified up to November 2026, not advice. Your case can differ: ask us before you rely on a figure.
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