Gratuity Calculator (New Labour Code 2026)
Fixed-term employees are now eligible for gratuity after just 1 year of service — permanent employees still need 5 years. Enter your details below to see your estimated gratuity, including the new labour code's 50% wage-rule adjustment.
Enter valid wages and a valid service period (months 0–11) to see your estimate.
Completed years counted: — eligible for gratuity not yet eligible
Gratuity (as wages currently structured)
Gratuity with the 50% wage rule applied
How to use this calculator
Choose whether you're a permanent or fixed-term employee, enter your last drawn monthly Basic + DA and your total service period. Add your annual CTC too if you want to see how the new labour code's 50% wage rule changes your gratuity base.
The formula, explained
Gratuity = (last drawn monthly wages × 15 × completed years) / 26
"Wages" means Basic + DA + retaining allowance. 15 represents 15 days' wages per completed year of service; 26 represents working days in a month. A period of service in excess of six months over a completed year counts as a full extra year — less than six months' excess is dropped.
Worked example — permanent employee
7 years 7 months of service, ₹25,000/month wages, ₹10,00,000 annual CTC:
- 91 months of service → 7 completed years, 7 months' remainder → rounds up to 8 completed years
- As structured: (₹25,000 × 15 × 8) / 26 = ₹1,15,385
- With the 50% wage rule (wage base tops up to ₹41,667): (₹41,667 × 15 × 8) / 26 = ₹1,92,308
Worked example — fixed-term employee
1 year 4 months of service, ₹20,000/month wages:
- 16 months of service → 1 completed year, 4 months' remainder → stays at 1 completed year
- Eligible (fixed-term needs only 1 year): (₹20,000 × 15 × 1) / 26 = ₹11,538
Key rule points
- Permanent employees: eligible after 5 years of continuous service.
- Fixed-term employees: eligible after just 1 year — this is new under the Code on Social Security, down from 5 years.
- The 50% wage rule (see the New Labour Code Salary Calculator) tops up your gratuity wage base if your structured wages fall short of 50% of your total remuneration.
- The gratuity tax-exemption cap is a separate topic, not calculated here.
FAQ
Gratuity = (last drawn monthly wages × 15 × completed years of service) ÷ 26. "Wages" means Basic + DA + retaining allowance, and 26 represents working days in a month.
Only if you are a fixed-term employee — under the Code on Social Security, 2020, fixed-term employees become eligible after 1 year of service, down from the earlier 5-year requirement. Permanent employees still need 5 years of continuous service.
If your structured wages (Basic + DA) are below 50% of your total remuneration, the new labour code rule tops up your wage base to that 50% floor for statutory calculations — including gratuity. This can meaningfully raise your gratuity amount even if your CTC hasn't changed.
A period of service in excess of six months over a completed year counts as a full additional year; anything less is dropped. For example, 7 years 7 months counts as 8 years, while 7 years 5 months counts as 7 years. This specific rounding rule is still being reconfirmed for the new Code — check back as the Central Rules are notified.
This calculator shows your gratuity entitlement, not its tax treatment. Gratuity has a separate statutory tax-exemption cap that isn't modelled here — we'll cover that in a dedicated post.
Formula last verified: 11 Aug 2026
Sources: Code on Social Security, 2020 (gratuity formula, fixed-term eligibility); Code on Wages, 2019 (50% wage rule).
This is an indicative estimate based on the gratuity formula and eligibility rules under the Code on Social Security, 2020, as understood at the time of writing. It does not model the gratuity tax-exemption cap, and both the completed-years rounding rule and the final Central Rules were not fully confirmed as of this verification date. Confirm your exact entitlement with your employer's HR/payroll team or a qualified professional before relying on this for financial decisions.