Gratuity calculator, with the working shown.

Last drawn monthly wages × 15 ÷ 26 × completed years of service, capped at ₹20,00,000. Since 21 Nov 2025 the wages are Code wages: Basic, DA and every allowance that is not excluded, plus excluded items such as HRA above half of total remuneration. A final part year beyond six months counts as a full year. On Code wages of ₹55,000 and 5 years 9 months 19 days of service, that is ₹1,90,385.

15 is the number of days' wages paid for each completed year of service. 26 is the number of working days in a month, so monthly wages ÷ 26 is one day's wage. Together, 15/26 of a month's wages, about 57.7%, is paid for each year.

Anyone whose formula amount reaches the ₹20,00,000 ceiling. With 20 years of service that takes Code wages of about ₹1,73,334 a month; with 30 years, about ₹1,15,556. Above that the Code pays ₹20,00,000; an employer may pay more by contract. The higher figure in the news is for central government employees, not private employers.

Three changes came with the Code on Social Security from 21 Nov 2025. Gratuity is worked on Code wages, so special allowance counts and excluded items above half of pay are added back. Service before 21 Nov 2025 is not split off: someone who joined years earlier and leaves after it gets every year on last drawn Code wages (Ministry FAQs, 16 Mar 2026); an exit before 21 Nov 2025 stays under the old Act, on Basic + DA. A fixed-term employee qualifies after 1 year under the contract instead of 5. The 15/26 formula, the 5-year rule for permanent staff and the ₹20,00,000 ceiling stay.

Not on resignation, on the Code's text: a permanent employee needs 5 years of continuous service, and the six-month rounding only applies to the years in the formula once someone is eligible. So 4 years 7 months gets nothing on resignation. Some High Courts have treated four years plus 240 days worked in the fifth year as five years. That is roughly 9 to 10 months on a six-day week, or about 11 months on a five-day week, so seven months is short even on that reading and 4.8 years is at the edge. Where an exit falls a few weeks short of five years, take legal advice before you settle the F&F. On death or disablement there is no minimum, so 4 years 7 months counts as 5 years in the formula.

Neither, and never on CTC. Since 21 Nov 2025 it is on Code wages: Basic, DA, retaining allowance and allowances that are not excluded, with HRA, conveyance and the other exclusions added back where they pass half of total remuneration. Employer PF and gratuity itself are not wages. For a salary of ₹76,600 with Basic ₹40,000, Code wages are ₹55,000.

Up to a limit it is exempt. The exempt part is the least of the gratuity paid, ₹20,00,000 and 15/26 of last drawn salary × years. ₹20,00,000 is a lifetime limit across all employers, so exemptions claimed on an earlier job's gratuity count against it. The Income Tax Department reads salary as Basic + DA, which gives a lower figure than Code wages: for Paiteq's Asha Rao the exempt part is ₹1,38,462 to ₹1,90,385. Deduct TDS on the lower figure until your CA confirms. Government employees' gratuity is fully exempt.

Within 30 days of the date it becomes payable, which is the date service ends. The employer works it out and pays without waiting for a claim. If it is paid late, simple interest is due from the date it became payable.

The Ministry's FAQs (16 Mar 2026) read the Code as giving a fixed-term employee gratuity after 1 year under the contract, counted from its start, and pro rata for the years served after that. Back-to-back short contracts with a break of a day or two are the arrangement most likely to be challenged; take legal advice before you rely on one. Contract labour supplied by a contractor are the contractor's employees, and their gratuity runs through the contractor.

No. Gratuity can be forfeited only where service is terminated for damage or loss the person caused (to the extent of it) or for riotous conduct, violence or an offence of moral turpitude, and the termination order has to say so. Notice-pay recovery and unreturned assets are settled from the final wages, not from gratuity. Gratuity is also on its own 30-day clock, while final wages are due within 2 working days.

Many offer letters show gratuity as about 4.81% of Basic (15 ÷ 26 ÷ 12) inside CTC. It is a contingent benefit: someone who leaves before 5 years does not receive it, so say that in the offer letter or expect a dispute at exit. Since 21 Nov 2025 the provision should be on Code wages, not Basic; a CTC line still on Basic understates the cost.

The nominee. Without a nomination it goes to the legal heirs after paperwork that can take months, and a minor's share is deposited with the authority the government notifies. Collect nominations at onboarding (Form F under the old Act).