Gratuity Calculator FY 2026-27 Updated

The formula is last drawn wages × 15 ÷ 26 × years of service. Wages means basic pay plus dearness allowance (DA) if your pay has one. HRA, special allowance, bonus and overtime are left out.

Why 26? The law treats a month as 26 working days, so 15 days of wages is 15/26 of one month's wages: ₹28,846 for every year on a ₹50,000 basic.

Gratuity does not depend on whether you resign, retire or are let go. What matters is how long you served, and the wages you were drawing at the end.

Only completed years earn gratuity, with one exception: a leftover period of more than six months is rounded up to a full year. Exactly six months is not more than six, so it is left out.

On ₹50,000 a month, 7 years 6 months gives ₹2,01,923 and 7 years 7 months gives ₹2,30,769: one extra month of service is worth ₹28,846.

This is why the calculator asks for years and months separately. If you are close to a round-up, a single month can change the result.

The 5-year rule is the standard one for permanent employees, and the labour codes keep it. What changed from 21 November 2025 is that a fixed-term employee now qualifies after 1 year, paid in proportion to the time served.

If you are a little short, the calculator tells you how many months are left and what you would get. For example, at 4 years and 9 months on a ₹50,000 basic you are 3 months away from about ₹1,44,231.

Rules about how a "year of service" is counted for someone who worked fewer days, or who changed employers, are not modelled here. Ask your HR team if you are close to the line.

The Code on Wages defines wages as basic plus DA, but says that if the other allowances add up to more than half of your total pay, the extra is added back. So a low basic no longer shrinks gratuity.

In the example, 10 years of service gives ₹1,73,077 on a ₹30,000 basic and ₹2,88,462 once the 50% rule is applied: ₹1,15,385 more.

Whether your employer applies this to your payslip yet is their call. The calculator shows both: leave "Total monthly pay" empty for the plain formula, or fill it in to see the 50% rule.

The cap matters mostly to long-serving, higher-paid employees. On a ₹1,00,000 basic you reach it after 35 years of service; on a ₹2,00,000 basic, after 18. On a ₹75,000 basic it does not happen in a working life.

The tax-free limit of ₹20,00,000 is across your whole working life, not per employer. If you have already received tax-free gratuity from an earlier job, less of the limit is left.

Central and state government employees are paid under their own pension rules and get all of their gratuity tax free. This calculator is for employees who are paid under the gratuity law, in the private sector and in most public companies.

That share is the "gratuity" line in your CTC breakup. On a ₹50,000 basic it is ₹2,404 a month. It reaches you only when you leave, and only if you have served the minimum years.

This is also why changing jobs before five years can quietly cost you: the money the company set aside for you over those years is not paid out.