India · Gratuity · Data research
Gratuity Calculator India: the formula, the new Labour Code rules and what they change
The Labour Codes came into force on 21 November 2025. The headlines focused on one-year gratuity for fixed-term staff, but the bigger change for most salaried employees is quieter. If your basic pay is a small share of your CTC, the new 50% wage rule can raise your gratuity by 25–100%. Calculate yours below, with the working shown.
Researched by Nikhil ShrivastavaReviewed by Pending independent reviewLaw last verified 23 October 2026Methodology · Report an error
0.58 monthsof basic + DA per year of service (15 ÷ 26)
+66.7%gratuity increase under the 50% rule when basic + DA is 30% of pay
1 yearminimum service for fixed-term employees, down from 5
₹20 lakhceiling currently notified
Calculate your gratuity in India
Uses the 15/26 formula of the Payment of Gratuity Act, 1972, which the Code on Social Security, 2020 (in force from 21 Nov 2025) carries forward. Enter your last drawn basic pay + dearness allowance per month.
Estimated gratuity₹1,84,6158 years counted
How this number was calculated
- Wages used₹40,000
- Years counted8 — 8 extra months is more than six, so it counts as a full year.
- Formula₹40,000 × 15 ÷ 26 × 8 = ₹1,84,615
- Legal ceiling₹20,00,000 → not reached
Estimate only. The 50% wage rule applies from 21 Nov 2025, and the final central and state rules on how it treats earlier service are still awaited. Check with your HR team. Tax on gratuity is not calculated here.
Gratuity formula and eligibility in India
The Code on Social Security, 2020 (Section 53 ↗) carries forward the Payment of Gratuity Act, 1972: 15 days' wages for every completed year, or part of a year over six months, based on the last wages drawn. For monthly-paid staff that is:
Gratuity = (Basic + DA) × 15 ÷ 26 × years of service
Worked example: ₹40,000 basic + DA, 7 years 8 months
8 months is more than six, so 8 years are counted. ₹40,000 × 15 ÷ 26 × 8 = ₹1,84,615. With 7 years 6 months, only 7 years would count: ₹1,61,538. Staying past the six-month mark is worth ₹23,077 here.
| Situation | Minimum service | How years are counted |
|---|---|---|
| Permanent employee (resignation, retirement, termination) | 5 years continuous | Completed years; a final part year over 6 months counts as 1 |
| Fixed-term employee | 1 year (Labour Codes) | Pro rata for the period served |
| Death or disablement | No minimum | Pro rata; paid to nominee or heirs on death |
| Working journalist | 3 years | As for permanent employees |
Claim vs reality: will the new Labour Codes raise your gratuity?
Finding: it depends almost entirely on one number, your basic + DA as a share of total pay. Under the Codes, if allowances are more than 50% of total remuneration, the excess is added back to "wages" (Ministry of Labour FAQs ↗). For anyone whose basic is under half of pay, gratuity rises. For anyone at 50% or above, nothing changes.
| Basic + DA share | Basic + DA | Old basis | Labour Code basis | Change |
|---|---|---|---|---|
| 25% | ₹25,000 | ₹1,44,231 | ₹2,88,462 | +100% |
| 30% | ₹30,000 | ₹1,73,077 | ₹2,88,462 | +66.7% |
| 35% | ₹35,000 | ₹2,01,923 | ₹2,88,462 | +42.9% |
| 40% | ₹40,000 | ₹2,30,769 | ₹2,88,462 | +25% |
| 45% | ₹45,000 | ₹2,59,615 | ₹2,88,462 | +11.1% |
| 50% | ₹50,000 | ₹2,88,462 | ₹2,88,462 | +0% |
The caveat: the Ministry says the Codes apply from 21 November 2025 and not retrospectively, and central and state rules were still awaited when this was published (EY ↗). How employers treat service before that date may vary, so the calculator keeps the rule as an option you switch on.
Gratuity table by wage and years of service
Covered employees, 15/26 formula, whole years. Amounts in rupees; ₹20 lakh ceiling applied.
| Basic + DA | 5 yrs | 7 yrs | 10 yrs | 15 yrs | 20 yrs | 25 yrs | 30 yrs |
|---|---|---|---|---|---|---|---|
| ₹20,000 | 57,692 | 80,769 | 1,15,385 | 1,73,077 | 2,30,769 | 2,88,462 | 3,46,154 |
| ₹30,000 | 86,538 | 1,21,154 | 1,73,077 | 2,59,615 | 3,46,154 | 4,32,692 | 5,19,231 |
| ₹40,000 | 1,15,385 | 1,61,538 | 2,30,769 | 3,46,154 | 4,61,538 | 5,76,923 | 6,92,308 |
| ₹50,000 | 1,44,231 | 2,01,923 | 2,88,462 | 4,32,692 | 5,76,923 | 7,21,154 | 8,65,385 |
| ₹75,000 | 2,16,346 | 3,02,885 | 4,32,692 | 6,49,038 | 8,65,385 | 10,81,731 | 12,98,077 |
| ₹1,00,000 | 2,88,462 | 4,03,846 | 5,76,923 | 8,65,385 | 11,53,846 | 14,42,308 | 17,30,769 |
| ₹1,50,000 | 4,32,692 | 6,05,769 | 8,65,385 | 12,98,077 | 17,30,769 | 20,00,000 | 20,00,000 |
Download: india-gratuity-by-wage-and-tenure.csv · india-labour-code-50-percent-rule-impact.csv (CC BY 4.0, please link to this page)
Methodology and limitations
Covered employers (10 or more employees) use 15 ÷ 26 with six-month rounding for permanent staff and pro rata years for fixed-term staff, death or disablement. Uncovered employers are shown with the common 15 ÷ 30, completed-years convention, which is company policy, not a legal entitlement. The 50% rule sets wages to the higher of basic + DA or half of total remuneration. Total remuneration should exclude items the Ministry FAQs exclude, such as variable pay, ESOPs and reimbursements.
Not modelled: income tax, gratuity trusts or insurance-funded schemes, better terms in your contract or a settlement, and seasonal or piece-rated work. Results are estimates, not legal or tax advice.
Gratuity FAQs (India)
What is the gratuity formula in India?
For employees covered by the law: gratuity = last drawn (basic + DA) × 15 ÷ 26 × years of service. A final part year of more than six months counts as a full year. The total is capped at ₹20 lakh.
Why 15/26 and not 15/30?
The law treats a month as 26 working days for monthly-rated employees, so 15 days' wages is monthly wages × 15 ÷ 26. Employers not covered by the law often use 15/30 under their own policy, which gives about 13% less.
Am I eligible for gratuity before 5 years?
Permanent employees need five years of continuous service, except on death or disablement. Under the Code on Social Security, 2020, in force from 21 November 2025, fixed-term employees qualify after one year and are paid pro rata.
Is 4 years 7 months counted as 5 years for gratuity?
Not for eligibility. The six-month rounding applies to the number of years used in the formula after you qualify, not to the five-year minimum itself. Some court rulings have treated shorter periods differently, so check with HR if you are close.
What changed for gratuity under the new Labour Codes?
Three things: fixed-term employees qualify after one year; 'wages' now cover all remuneration, and if allowances exceed 50% of total pay, the excess is added back to wages; and gratuity is payable on the same 15-days-per-year basis with a ₹20 lakh ceiling. The Ministry of Labour says the Codes apply from 21 November 2025 and not retrospectively.
Will my gratuity increase under the 50% wage rule?
Only if your basic + DA is less than half of your total pay. If it is 30%, wages for gratuity rise to 50% of pay, an increase of 66.7%. If it is already 50% or more, nothing changes.
Is gratuity taxable?
Gratuity received by private-sector employees is tax-exempt up to a lifetime limit, which has been ₹20 lakh; anything above is taxed as salary. Government employees' gratuity is fully exempt. Check the current rule under the Income-tax Act, 2025 with your employer or a tax adviser, as this calculator does not compute tax.
When must gratuity be paid?
Employers must pay within 30 days of it becoming due. If it is delayed or refused, you can approach the controlling authority under the labour department.
Sources
01
FAQs on the Labour Codes ↗Ministry of Labour and Employment, Government of India. Official. Codes effective 21 Nov 2025; 15 days' wages per year; ₹20 lakh ceiling; allowances above 50% of remuneration added back to wages; not retrospective.
02
Code on Social Security, 2020 — Section 53 (Payment of gratuity) ↗Bare Act text via AdvocateKhoj. Law text. Five years' service (three for working journalists); not required on death, disablement or expiry of fixed-term employment; pro rata for fixed-term.
03
Payment of Gratuity (Amendment) Act, 2018 ↗Government of India, published by the West Bengal Labour Department. Official. Ceiling set by notification (₹20 lakh, S.O. 1420(E)); maternity leave up to 26 weeks counts as service.
04
New labour codes implemented across the country effective 21 November 2025 ↗EY India tax alert. Professional summary. Fixed-term workers entitled after one year; final central and state rules still awaited at publication.
05
New gratuity rules explained ↗Business Today, 10 Apr 2026. Secondary. Confirms the 15/26 formula is unchanged and payment is due within 30 days.
Changelog
- 23 October 2026 Added UAE termination guide, UAE and India gratuity tables, Saudi and Kuwait resignation guides, and a Hindi India calculator.
- 23 October 2026 Added guides on UAE gratuity on resignation, India gratuity before 5 years and gratuity tax, and calculators for Saudi Arabia, Qatar, Oman, Kuwait and Bahrain.
- 23 October 2026 Pages published. Rules checked against u.ae (updated 6 Oct 2025), the Ministry of Labour Labour Code FAQs and the Code on Social Security, 2020.