Gratuity calculator
Estimate gratuity using the common statutory-style formula and a rough split between taxable and exempt amounts for covered employers.
Reviewed July 2026 · Tax Year 2026–27 (FY 2026–27) tax slabs in engine · Methodology
Legal/tax treatment can differ — this is a planning estimate (see accuracy card).
Required inputs
- Last drawn monthly statutory wages (₹)
- Years of service (can be fractional for rough estimates)
- Whether covered by statutory gratuity provisions (affects rough exemption model)
Assumptions used by this estimate
- Formula: (15/26) × last drawn monthly salary × years of service.
- Tax-exempt slice for covered employers is capped at ₹₹20,00,000 in this model.
- Five years is the usual threshold; qualifying fixed-term employment, death and disablement have different rules.
- Enter last-drawn statutory wages after verifying the 50% allowance add-back; this calculator does not derive the wage base.
Worked example (same engine as live calculator)
Illustrative inputs: last drawn ₹1,00,000 per month, 7 years of service, covered employer. Estimated gross gratuity ₹4,03,846; exempt (rough) ₹4,03,846; taxable (rough) ₹0 — figures are produced by the same function as the live calculator above.
FAQ
Is the taxable amount my final tax?
No. Tax on gratuity depends on employer type, exemptions, and salary history. Consult a CA for exact treatment.
Gratuity: current wage definition, service eligibility and tax limits
Gratuity for covered employees is governed by the Code on Social Security, 2020, in force since 21 November 2025. Five years of service is the ordinary eligibility threshold, but death, disablement and qualifying fixed-term employment have exceptions. For fixed-term employees, current Ministry guidance identifies a one-year service rule.
The common illustrative method is 15 days of last-drawn statutory wages per counted year, often shown as monthly wage × 15 × years ÷ 26. Basic, DA and any retaining allowance are the starting components; an excess of specified excluded payments beyond the 50% threshold may need to be added back. Basic+DA alone is therefore not a universal statutory base.
SalaryExit does not calculate the wage add-back or determine eligibility. Enter the wage basis verified with payroll; the result is a mathematical estimate. Rounding, employment category, service length, contractual enhancements and tax exemptions require separate checks. The tool's ₹20 lakh exempt-cap approximation is not an individual tax assessment.
- Check employer coverage and employment category before applying the estimate.
- Confirm the last-drawn statutory wages and any 50% allowance add-back.
- Check exceptions for death, disablement and qualifying fixed-term service.
- Request the employer's written gratuity calculation and verify tax separately.
Related guides
Spotted a wrong number or confusing label? Report a calculation error — every report gets checked against the engine.
Gratuity eligibility under the current labour codes
Gratuity is an employer-funded statutory benefit governed by the Code on Social Security, 2020, in force from 21 November 2025. The earlier Payment of Gratuity Act, 1972 is historical legislation, not the governing present-law reference. Coverage depends on the establishment and applicable provisions.
Five years of continuous service is the usual threshold, but it is not universal. Death and disablement are exceptions, and qualifying fixed-term employees have a separate rule: Ministry of Labour guidance specifies eligibility after one year of service under the fixed-term contract. Do not assume a blanket rule that "four years and 240 days always counts as five years".
How the 15/26 estimate works
Illustrative gratuity = (15 × Last Drawn Monthly Statutory Wages × Years Used) ÷ 26
The 15/26 method estimates 15 days' wages for a year of service. Actual service-year rounding and special categories, including certain fixed-term and seasonal arrangements, require separate verification. The calculator accepts the monthly wage basis you supply; it does not derive your statutory wage base from a full salary breakup.
For the current Code on Social Security wage definition, Basic, dearness allowance and retaining allowance (if any) generally form the starting point. When specified excluded allowances or payments exceed 50% of relevant remuneration, the excess may have to be added back to statutory wages. So "Basic + DA only" is not universally correct. Confirm the wage base with payroll before entering it here.
Example: if the applicable last-drawn monthly statutory wage base is ₹50,000 and eight years are counted, this simplified model returns approximately ₹2,30,769 before any legally applicable ceiling, rounding, entitlement and tax checks.
Tax exemption and CTC
The calculator shows a rough tax-exempt split using its configured ₹20 lakh cap for the covered-employer model. This is not an assessment of your actual income-tax exemption: employer category, applicable tax law, prior gratuity receipts, salary history and entitlement can change the result. A statutory benefit ceiling and an income-tax exemption limit are not the same claim.
Employers may include an estimated gratuity accrual in CTC. That provision is not monthly take-home cash, and leaving before five years does not invariably eliminate entitlement because legal exceptions exist. Check the contract, employment category and current wage definition rather than relying on a CTC percentage alone.
Official sources: labour-code commencement, Ministry FAQ on wages and gratuity, and March 2026 clarifications.