How this calculator works
- Step 1Wages₹50,000Basic and DA, plus allowances above half of total pay.
- Step 2Daily rate₹1,923.08Monthly wages divided by 26 working days.
- Step 3Years counted11 yearsA part year counts only above six months.
- Step 4Gratuity₹3,17,30815 days of wages for each counted year, up to ₹20 lakh.
Gratuity is a lump sum your employer pays when the job ends. From 21 November 2025 it follows section 53 of the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972.
The amount is 15 days of wages for every counted year of service. For a monthly paid employee, 15 days means monthly wages divided by 26, times 15.
The Ministry of Labour says gratuity paid on or after 21 November 2025 uses the new wage definition and the wages last drawn, for the whole of your service.
The 50% wage rule
Allowances above half of your total pay now count as wages, so a low basic no longer shrinks your gratuity as much.
Wages for gratuity are basic pay, dearness allowance and retaining allowance. HRA, conveyance, special allowance, employer PF, overtime and commission are excluded, but only up to half of your total pay.
- Limit
50% of total remuneration- Added back
allowances − limit, if positive- Wages
basic + DA + added back
- BBasic pay and DA ₹20,000
- AAllowances ₹40,000
- TTotal remuneration ₹76,000
- Allowance limit50% × ₹76,000₹38,000
- Added back₹40,000 − ₹38,000₹2,000
- Wages₹20,000 + ₹2,000₹22,000
The figures are from the Ministry’s FAQs of 30 December 2025. The calculator applies the same steps to your pay.
Worked example: resigning after 10 years 7 months
- Gratuity
wages ÷ 26 × 15 × years counted
- BBasic pay and DA ₹40,000
- AAllowances ₹60,000
- nService 10 years 7 months
- Allowance limit50% × ₹1,00,000₹50,000
- Wages₹40,000 + ₹10,000₹50,000
- Years counted10 + 1 (7 months is over six)11
- Gratuity₹50,000 ÷ 26 × 15 × 11₹3,17,308
On basic and DA alone, the same service would give ₹2,53,846. The 50% rule adds ₹63,462 here.
When the part year counts
One month can change the result by a full year of gratuity. Six extra months do not count; seven do. Leaving a month short of five years after resigning gives nothing.
Who qualifies
- Resign or retire5 yearsContinuous service with the same employer.
- Fixed term ends1 yearPaid pro rata: a one-year contract on the worked pay gives ₹28,846.
- Death or disablementNo minimumPaid to the nominee or heirs on death.
“Pro rata” is not defined further in the Code. The calculator counts part years the same way for every exit, and also shows a strict month-by-month figure so you can compare.
Read the result
The headline is the estimated gratuity, capped at ₹20,00,000.
The table shows the wages used, how much the 50% rule added and the years counted. At 10 years 7 months, the ceiling applies once monthly wages pass about ₹3,15,152.
Your employer must pay within 30 days of the gratuity becoming payable. A contract or award with better terms still applies.
Assumptions and limits
- Monthly paid onlySeasonal and piece-rated workers use different rules.
- Government staffEmployees under their own government gratuity rules are not covered.
- Income taxThe taxable part of gratuity is not worked out here.
- Continuous serviceBreaks, and days actually worked near the five-year mark, can matter.
Forfeiture for misconduct, working journalists’ three-year rule and employer-specific schemes are outside this tool.
Gratuity is one part of a salary package. The in-hand salary calculator shows the monthly take-home from your CTC, and the retirement planner shows how a lump sum fits into a longer plan.
Common mistakes
Mistake: Using basic pay alone after November 2025.
Instead: Include allowances above half of total pay, as the 50% rule requires.
Mistake: Dividing monthly pay by 30.
Instead: Use 26 days, as the Code says for monthly rated employees.
Mistake: Counting exactly six extra months as a year.
Instead: Only a part year of more than six months counts.
Mistake: Including annual performance bonuses in wages.
Instead: Leave them out; the Ministry says they are not wages.
Checking the method
Every golden case is rebuilt from the Ministry's wage steps and a month-by-month walk of days earned.
An independent script follows the Ministry of Labour’s illustration for wages and counts days earned month by month, then applies the ₹20 lakh ceiling. It reproduces the Ministry’s ₹22,000 wage figure exactly.
Read how we test our calculators, or browse more money calculators.