WebSoftOSHow it works
Gratuity is generally payable after five years of service. Under the Code on Social Security, 2020, fixed-term employees qualify on a pro-rata basis after one year. The wage base follows the definition of wages in the Labour Codes, so a wider wage base raises the provision.
Gratuity up to ₹20 lakh is exempt from tax, a limit the gratuity calculator on this site applies.
Example
On wages of ₹24,000, gratuity after 5 years is 24,000 × 15 ÷ 26 × 5 = ₹69,231. On wages of ₹45,000 it is ₹1,29,808.
Frequently asked questions
What is the gratuity formula?
15 ÷ 26 × last drawn wages × completed years of service.