Gratuity Calculator
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Gratuity Calculator summary
Calculation schedule
Figures may be rounded for display.
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Gratuity calculator formula
For an employee covered by the standard gratuity formula, fifteen days of wages are counted for each eligible service year.
Gratuity = last drawn monthly wages × 15 ÷ 26 × counted service years If extra service is more than 6 months: counted years = completed years + 1 Estimated payable amount = lower of formula amount and the ceiling, when a ceiling applies
Use the wage amount that payroll confirms for gratuity. It may not be the same as total monthly salary.
Five years of continuous service is the usual condition for regular employees, but legal exceptions and different rules can apply.
Example with numbers
Last drawn monthly wages are ₹50,000 and service is 7 years 8 months. More than 6 extra months means 8 counted years. The estimate is ₹50,000 × 15 ÷ 26 × 8 = about ₹2,30,769.
What is a gratuity calculator?
Gratuity is a payment linked to wages and length of service. It may become payable when employment ends and the legal or contract conditions are met.
This calculator gives a simple estimate from the wage and service entered by you. It does not decide whether a person is legally eligible.
How to use the gratuity calculator
- Enter the last drawn monthly wage used for gratuity.
- Enter completed years and extra completed months of service.
- Choose the employment type shown in the calculator.
- Check counted years, formula gratuity and the amount after any ceiling.
What the results mean
- Counted service: the service years used by the formula.
- Formula gratuity: the result before any ceiling.
- Estimated payable amount: the result after the selected ceiling.
- Eligibility note: a warning when the entered service may be below the usual condition.
How this gratuity calculation works
Monthly wages are divided by 26 to get the daily figure used by the formula. Fifteen days are then counted for each service year.
Extra service is rounded up only when it is more than six completed months. The calculator shows the uncapped amount so the effect of a ceiling remains clear.
Why a gratuity calculator is useful
- It shows how the 15/26 formula is used.
- It explains whether extra months change counted service.
- It displays the amount before and after a ceiling.
- It gives a quick figure to compare with an employer statement.
Why the actual gratuity may be different
Payroll may use a different statutory wage after checking salary components. Service breaks and the exact leaving date can also matter.
An employment contract may give more than the legal minimum. Tax exemption is a separate question and is not calculated here.
Sources
- Ministry of Labour: Compliance Handbook under the Four Labour Codes
- Ministry of Labour: Labour Codes FAQs dated 16 March 2026
- Code on Social Security, 2020
Rule and source review: Reviewed 31 August 2026 against the current labour-code guidance. Recheck the notified ceiling and implementation rules before publication updates.
Disclaimer
This gratuity calculator gives a general estimate. It does not decide legal eligibility, final wages, tax exemption or the amount an employer must pay. Check employment records and current law, or obtain qualified advice where needed.
Frequently asked questions
What is the gratuity formula?
A common formula is last drawn monthly wages × 15 ÷ 26 × counted service years.
Why is 15 divided by 26?
The formula uses fifteen days of wages and treats 26 as the working days in a month.
Are 7 years and 8 months counted as 8 years?
Under the usual rounding rule, more than six extra months are counted as another year.
Is five years of service always required?
It is the usual rule for regular employees, but exceptions and other employment rules can apply.
Is gratuity tax-free?
Tax treatment depends on employee type, the amount received and current tax law. This calculator does not decide it.