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Gratuity in India: Eligibility, Calculation and Fixed-Term Employment

Gratuity is an employment-linked benefit payable when the relevant legal conditions are met. It is different from monthly salary, PF and an employer's internal CTC provision. Eligibility depends on the applicable law, service history and type of employment, so a single five-year rule does not answer every case.

Gratuity amount calculator

Enter the eligible wages and eligible years already established for your case. This is an amount estimate, not a service-eligibility decision.

Illustrative monthly-rated formula: wages × 15 ÷ 26 × eligible years. Use the correct service rounding or pro-rata basis for your employment category before entering years. A zero ceiling input produces an uncapped result. Tax exemptions, enhanced employer benefits and legal eligibility are not calculated.

Calculated on your device. These calculator inputs are not submitted by this tool or saved to a server.

Check the current employment category

The Ministry of Labour's March 2026 FAQs discuss gratuity under the Code on Social Security and the wage definition effective from 21 November 2025. They state that qualifying direct fixed-term employees become eligible after one year under the contract. They distinguish this from contract labour engaged through a contractor. Do not label every agency worker a direct fixed-term employee.

For an ordinary resignation case, establish the continuous-service requirement and any applicable exception from the current law and payroll records. Death or disablement and fixed-term arrangements can require different treatment. Do not assume that a social-media claim about four years and 240 days settles every jurisdiction and employment situation.

Understand a calculation before using a calculator

For a standard monthly-rated example, the formula in Section 53 of the Code on Social Security, available through India Code, is eligible last-drawn monthly wages multiplied by 15, divided by 26, multiplied by eligible years of service. Confirm which wages and service period legally apply before entering numbers. A payslip label such as basic pay is not always the complete answer to the statutory wage definition.

With assumed eligible monthly wages of ₹30,000 and six eligible years, the arithmetic is ₹30,000 × 15 ÷ 26 × 6, approximately ₹1,03,846. This illustrates the calculation only; it does not establish entitlement, tax treatment, a statutory ceiling or service rounding for a particular employee. Ask payroll for those separate determinations in writing.

What to collect on exit

Keep your joining and exit records, appointment terms, service history and final wage breakup. If employment moved between group companies or a contractor and a principal employer, do not assume continuity without checking the record. Ask the employer for its calculation, wage basis, service period and applicable provisions.

The government's Code on Social Security explainer is a useful starting point, alongside the Ministry FAQs. For a disputed entitlement, obtain qualified advice or approach the competent labour authority. A gratuity amount shown within CTC is not a promise that it is paid monthly or becomes payable whenever you resign.

Establish service before calculating the amount

Ask which employer and service period the calculation recognises. Joining the same brand through another legal entity, moving from contractor payroll to direct employment or taking a break can require a specific continuity assessment. Do not combine dates from different records merely because the workplace stayed the same.

For a standard regular-service calculation, the Code's wording refers to completed years and a part exceeding six months. Exactly six months should not automatically be treated as exceeding six months. Direct fixed-term employment has different eligibility and pro-rata considerations; it should not be treated as identical to agency contract labour. Obtain the applicable service basis before using the tool.

What the calculator includes

It applies entered eligible monthly wages × 15 ÷ 26 × entered eligible service years. It also allows you to enter a payment ceiling if one applies. A zero in that field means no ceiling has been applied to the estimate; it is not a declaration that no legal or contractual ceiling exists.

If HR has confirmed a pro-rata service period, enter that confirmed period in years. If HR has confirmed a rounded number of eligible years for a regular case, enter that number. This avoids a calculator silently making a legal decision about your employment category or service history.

A gratuity provision is not a monthly entitlement

An offer may show an annual employer provision in CTC. That accounting figure does not establish the amount payable on resignation or mean it appears in every monthly bank credit. The eventual entitlement uses the applicable service and wage basis, with any legally relevant exceptions or more favourable contractual terms checked separately.

Questions for a settlement query

Request the recognised service dates, eligible wages, formula, service rounding or pro-rata method, applicable ceiling and explanation of any enhanced company benefit. Keep the appointment and exit records with the response. Tax treatment is a separate calculation and is not inferred by this tool. For a disputed entitlement, use a qualified adviser or the competent authority; changing a calculator input cannot resolve a disagreement about which law or service record applies.

Prepared 1 November 2026 using the linked official sources. General education; product approval, fees, coverage and statutory entitlements depend on current terms and your circumstances. Illustrations are not personalised financial or legal advice.