Gratuity Calculator
Calculate gratuity in India under the Code on Social Security, 2020, and how much is tax-free.
About the Gratuity Calculator
Since 21 November 2025 gratuity is governed by the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972. The formula is unchanged: 15 days' wages for each completed year, using a 26-day month. Service of more than six months in the final year counts as a full year.
Employees normally need five years of continuous service; fixed-term employees now qualify after one year. The tax exemption for private-sector employees is capped at ₹20 lakh.
The formula
Gratuity = last wage × 15 × years ÷ 26
Worked example
Example: Gratuity = ₹3,80,769
- Inputs: Last monthly wage (basic + DA): ₹66,000; Years of service: 9 years; Extra months: 8 months; Employer covered by the gratuity law: Yes (15/26).
- Formula: Gratuity = last wage × 15 × years ÷ 26
- Result: Gratuity = ₹3,80,769
- Years counted: 10
- Tax-exempt: ₹3,80,769
Questions people ask
Does gratuity apply on death or disability?
Yes, with no minimum service.
Is gratuity taxable in the new regime?
The same exemption applies under both regimes.