Gratuity Calculator 2026: Estimate Your Gratuity Online (Formula & Rules)

Calculate your estimated gratuity using your eligible wages and years of service. Enter your details below to get an estimate, then see the formula, eligibility rules, and tax treatment explained simply.

📊 Gratuity Calculator

Note: For the live version, this section should contain a working HTML/JavaScript calculator.

Input Field	Enter Your Details
Monthly eligible wages (₹)	[__________]
Completed years of service	[____]
Additional months of service	[____]
Employee category	[Dropdown: Government / Private (Covered) / Private (Not Covered)]

⚠️ This is an estimate, not a final employer settlement. The actual amount depends on the applicable wage definition, service records, and employer payroll interpretation. See calculator assumptions below.

⚡ Quick Answer

Under the traditional statutory formula, gratuity is estimated as: (Wages × 15 × Years of Service) ÷ 26

Example: If your monthly wages are ₹50,000 and you've worked for 10 years — (50,000 × 15 × 10) ÷ 26 = ₹2,88,462 (estimated).

⚠️ 2026 Update: The Code on Social Security, 2020 came into effect on November 21, 2025. This changes the definition of "wages" used for gratuity calculation. The amount considered may differ from the older Basic + DA approach. See the 2026 section for details.

The Gratuity Formula (Explained Simply)

Traditional Payment of Gratuity Act Formula — For Eligible Employees Covered Under the Act

Gratuity = (Wages × 15 × Years of Service) ÷ 26

Component	What It Means
Wages	Under the traditional Payment of Gratuity Act calculation, this was generally based on Basic Salary + DA. For calculations governed by the Social Security Code from 21 November 2025, the applicable statutory definition of "wages" must be applied instead of assuming that Basic + DA is always the complete calculation base.
15	15 days' wages for each completed year of service
26	Number of working days in a month (excluding Sundays)

📌 Important: The traditional formula uses Basic + DA. From November 21, 2025, the Social Security Code's definition of "wages" may change what is included. Check with your HR department for the applicable wage components.

For Employees Outside the Statutory Framework

Employees in establishments not covered by the Payment of Gratuity Act may have gratuity determined by their employment contract and applicable law. The formula is not automatically the same as the statutory one. Check your contract or consult HR.

Example Calculations

Monthly Wages	Years of Service	Employer Type	Estimated Gratuity
₹30,000	7 years	Covered	₹1,21,154
₹50,000	10 years	Covered	₹2,88,462
₹1,00,000	15 years	Covered	₹8,65,385

Calculated using the statutory formula under the Payment of Gratuity Act, 1972

Worked Example

If your wages are ₹55,000 and you've completed 15 years:

(15 × 55,000 × 15) ÷ 26 = ₹4,75,962

Gratuity Eligibility — Who Qualifies?

Gratuity generally becomes payable after 5 years of continuous service with the same employer — subject to the applicable statutory provisions and exceptions.

Eligibility Rule	Details
Minimum service	5 years of continuous service (generally)
Employer coverage	Establishment must meet statutory coverage conditions
Exceptions	Death or permanent disablement — gratuity is payable regardless of tenure

What "Continuous Service" Means

Under the Payment of Gratuity Act, continuous service includes:

• Uninterrupted service with the same employer
• Service interrupted by sickness, accident, leave, or authorised absence
• Service deemed continuous under statutory provisions (including the 240-day/190-day rules)

⚠️ Important distinction: Eligibility to receive gratuity (generally 5 years of continuous service) and calculation of years for the formula are separate concepts. The rounding rule (6+ months = 1 full year) applies only after you have qualified for gratuity — it does not, by itself, make you eligible.

Rounding Rules — How Part-Years Are Handled

Once you're eligible, completed years are calculated as follows:

Your Service	Rounded To
7 years 5 months	7 years
7 years 6 months or more	8 years
14 years 5 months	14 years
14 years 7 months	15 years

Example: If you've worked for 9 years and 7 months, your service rounds to 10 years for calculation purposes.

Gratuity Rules in 2026 — What's Changed

The Social Security Code, 2020 (Effective November 21, 2025)

The Code on Social Security, 2020 came into effect on November 21, 2025. This changes how gratuity is calculated.

Change	What It Means
"Wages" definition changed	Section 2(88) of the Code defines wages differently. Payments outside the specified components are not considered for gratuity.
Fixed-term contract employees	Fixed-term employees directly engaged under a fixed-term employment contract: The Ministry's 2026 FAQ states that gratuity is payable on a pro-rata basis where the employee has completed one year of service under the contract, subject to the applicable provisions.
Effective date	Gratuity calculations from November 21, 2025 are governed by the Code's wage provisions.

📌 Bottom line: The amount considered for gratuity may differ from the older Basic + DA approach. Check with your HR department for how your employer applies the new rules.

Source: Ministry of Labour & Employment, Government of India — Social Security Code 2026 FAQs

Tax on Gratuity — Section 10(10) of the Income Tax Act

Gratuity Tax Exemption in 2026

Gratuity tax exemption depends on your employee category and the applicable provisions of Section 10(10) of the Income Tax Act.

Employee Category	Tax Exemption Treatment
Central / State Government employees	Tax treatment under Section 10(10) differs from that applicable to non-government employees. For AY 2026–27, the Income Tax Department's validation rules use a ₹25 lakh figure for Central and State Government categories. Check the applicable category and current tax provisions before filing.
Employees covered by the Payment of Gratuity Act	Exempt up to the lower of: actual gratuity received, eligible gratuity as per formula, or the statutory limit (₹20 lakh for many categories)
Other employees (not covered)	Exempt up to the lower of: actual gratuity received, half-month salary for each year of service, or the statutory limit

Key Points to Remember

Point	Explanation
Government employees	The exemption treatment and monetary limits are governed by specific provisions under Section 10(10). For AY 2026–27, a ₹25 lakh figure is used for Central/State Government categories.
₹20 lakh limit	Applies to many non-government employees — it's a lifetime aggregate limit
Lifetime limit	The exemption limit is an aggregate lifetime limit across all employers for most non-government employees. Previous gratuity exemptions may reduce what's available for subsequent claims.
Taxable portion	Any amount above the applicable exemption limit is taxed as per your income tax slab

📌 Always verify your specific category and applicable limit with a tax professional or refer to the Income Tax Department's official notifications.

Source: Income Tax Department, Government of India — Section 10(10) provisions and AY 2026–27 validation rules

Common Mistakes to Avoid

Mistake	Why It's Incorrect
Using gross salary instead of wages	The formula uses "wages" as defined — under the traditional method, that's Basic + DA, not your full CTC.
Assuming 5 years automatically qualifies	Eligibility depends on the applicable statutory provisions governing continuous service and the circumstances of separation.
Confusing eligibility with calculation rounding	The rounding rule applies after you qualify — it doesn't make you eligible.
Forgetting the lifetime tax limit	Exemption claimed from previous employers may reduce what's available to you now.

Calculator Assumptions — Please Read

• The result is an estimate, not a final employer settlement.
• Wage components are determined according to the applicable law (which changed in November 2025).
• Service eligibility is subject to statutory conditions and employer records.
• Tax treatment is separate from the gratuity calculation.
• Employer payroll records may produce a different final amount.
• Always verify with your HR department or a qualified professional.

Why "4.81% of CTC" Appears in Salary Breakups

You may see gratuity shown as roughly 4.81% of CTC in salary offers. This comes from:

15 ÷ 26 × 12 ÷ 365 ≈ 4.81%

But gratuity is not automatically 4.81% of your total CTC. The 4.81% figure is commonly used as an annual gratuity provision in salary structures; it does not mean that 4.81% of your total CTC is necessarily the gratuity payable to you. The actual amount depends on:

• Which wage components are considered
• Your actual years of service
• The applicable statutory rules

Always refer to the statutory formula for the actual calculation.

What If Your Employer Doesn't Pay?

If you're eligible and your employer delays payment:

Your Rights	Details
Payment deadline	Under the Payment of Gratuity Act, gratuity is generally payable within 30 days from the date it becomes due, subject to the applicable statutory provisions.
Interest on delay	Employer may be liable to pay interest on the delayed amount
File a claim	You can approach the Controlling Authority under the Act

Final Takeaway

Use this calculator to estimate your gratuity, but always verify with:

• Your employer's HR or payroll department
• The applicable statutory framework (Payment of Gratuity Act or Social Security Code)
• Current tax rules under Section 10(10)

💡 Pro tip: When planning your resignation, check your service period against the rounding rules — but remember, eligibility and calculation are separate concepts.

FAQs: Gratuity Calculator

Official Sources

Source	Specific Reference / Link
Payment of Gratuity Act, 1972	India Code — Payment of Gratuity Act
Code on Social Security, 2020	Ministry of Labour & Employment — Social Security Code
Social Security Code FAQs (2026)	Ministry of Labour & Employment — 2026 FAQs on Gratuity
Income Tax Act — Section 10(10)	Income Tax Department — Tax on Gratuity

Read More: LPA Full Form: Meaning, Calculation & What It Really Means for Your Salary