Labour Code Advisor

Free Tool · No Login Required

Gratuity Calculator

Calculate gratuity instantly as per the Code on Social Security, 2020 — manually, or automatically from your joining and relieving dates.

✓ 100% Free — no signup, no paywall

"Wages" as defined under Section 2(88) of the Code on Social Security, 2020 — not just Basic + DA as under the old Payment of Gratuity Act, 1972. Allowances (HRA, conveyance, etc.) are included unless they exceed 50% of total remuneration, in which case the excess is added back into wages.

6 months or more counts as one full year

Formula: (Salary × 15 × Years of Service) / 26
Fill in your details and click Calculate to see your estimated gratuity amount.
This calculator provides an estimate for general informational purposes only and does not constitute legal or financial advice. Actual gratuity payable may vary based on your employment contract, organisation policy, and state-notified rules under the Code on Social Security, 2020. Please consult your HR department or a qualified professional for exact figures.

How is gratuity calculated?

Gratuity is a lump-sum benefit paid by an employer in recognition of an employee's service, payable on retirement, resignation, superannuation, death, or disablement. Chapter V (Sections 53–58) of the Code on Social Security, 2020 governs gratuity in India, having consolidated the earlier Payment of Gratuity Act, 1972.

This free calculator from Labour Code Advisor applies this formula automatically, with the option to calculate years of service directly from your joining and relieving dates.

Frequently asked questions

Is this gratuity calculator free to use?

Yes. Labour Code Advisor's gratuity calculator is completely free, requires no login or signup, and has no usage limits. It is provided as a public tool to help employees and HR professionals across India estimate gratuity payouts accurately.

How is gratuity calculated under the Code on Social Security, 2020?

Gratuity is calculated at the rate of 15 days' wages for every completed year of service, based on the employee's wages last drawn — as defined under Section 2(88) of the Code on Social Security, 2020, not the older Basic + DA formula. The formula used is (Wages × 15 × Years of Service) / 26, which this calculator applies automatically, including an option for date-based service calculation.

What is the minimum service period required for gratuity?

Under Section 53 of the Code on Social Security, 2020, an employee must complete at least 5 years of continuous service to be eligible for gratuity. This condition is waived in case of death, disablement, or expiry of a fixed-term employment contract. For working journalists, the qualifying period is 3 years instead of 5.

Are fixed-term employees eligible for gratuity after just 1 year?

Under Section 53, fixed-term employees become eligible for gratuity on a pro-rata basis after completing 1 year of continuous service, instead of the standard 5-year requirement for permanent employees. Some states had not yet notified their implementing rules as of late 2025, so employers should confirm current applicability in their state before processing payouts on this basis.

How is "continuous service" defined for gratuity purposes?

Under Section 54 of the Code on Social Security, 2020, continuous service includes uninterrupted service as well as periods interrupted by sickness, accident, leave, authorised absence, lay-off, strike, or lockout, provided the interruption isn't treated as a break in service under the employer's standing rules. For seasonal establishments, an employee is deemed to be in continuous service for a year if they worked at least 75% of the days the establishment was operational.

Within how many days must an employer pay gratuity?

Under Section 56(3) of the Code on Social Security, 2020, an employer must pay gratuity within 30 days from the date it becomes payable. If delayed, Section 56(4) requires the employer to pay simple interest on the due amount for the entire delay period, at a rate notified by the Central Government, unless the delay is solely attributable to the employee.

What happens if there's a dispute over the gratuity amount?

Under Section 56(5) of the Code on Social Security, 2020, if there's a dispute over the amount, eligibility, or the person entitled to receive gratuity, the employer must deposit the undisputed portion with the competent authority. Either party can then apply to the competent authority, which has powers similar to a civil court to summon witnesses, examine evidence, and decide the matter after a hearing.

Is gratuity taxable in India?

For government employees, gratuity is fully exempt from income tax. For private-sector employees, gratuity up to ₹20,00,000 is exempt under Section 10(10) of the Income Tax Act, 1961. Any amount received above this limit is taxed as per the employee's applicable income tax slab.

Is there a maximum limit on gratuity payment?

Yes, the statutory ceiling is ₹20,00,000, though employers may voluntarily pay a higher amount under company policy or a separate agreement. This calculator lets you apply the standard limit or set a custom cap to see how it affects your final payout.

Does an employer need gratuity insurance?

Under Section 57 of the Code on Social Security, 2020, every employer other than government establishments must obtain compulsory gratuity insurance from an authorised insurer to cover their gratuity liability, unless they maintain an approved gratuity fund covering 500 or more employees.

Can an employer reduce or deny gratuity payment?

An employer can forfeit gratuity, wholly or partially, only if an employee's services are terminated for an act of violence or for misconduct causing loss or damage to company property, and only to the extent of that loss. Beyond these specific grounds, gratuity cannot be withheld once an employee meets the statutory eligibility conditions.