Gratuity calculator: how much gratuity you will get (private and central government)
For employees covered by the gratuity law, gratuity = last drawn (basic + DA) × 15 × years of service ÷ 26. A part-year of more than 6 months counts as a full year. Private-sector gratuity is tax-free up to ₹20 lakh; Central Government gratuity is capped at ₹25 lakh and fully tax-free. Permanent staff need 5 years of service; under the labour codes (from 21 Nov 2025), fixed-term employees qualify after 1 year.
Key facts Last verified: 25 Sep 2026
| Item | Details | Source |
|---|---|---|
| Formula (covered employers) | Wages × 15/26 × completed years (more than 6 months = 1 year) | Payment of Gratuity law / Code on Social Security |
| Eligibility | 5 years continuous service (not needed on death/disablement); fixed-term: 1 year | Code on Social Security, 2020 (in force 21 Nov 2025) |
| Tax-free limit (non-government) | ₹20 lakh (lifetime) | Income-tax law |
| Central Government ceiling | ₹25 lakh (from 1 Jan 2024, when DA reached 50%) | DoPPW |
| Government gratuity | Fully exempt from tax | Income-tax law |
Examples
| Last basic + DA | Service | Gratuity (covered, 15/26) |
|---|---|---|
| ₹30,000 | 5 years | ₹86,538 |
| ₹50,000 | 10 years 7 months (→ 11) | ₹3,17,308 |
| ₹75,000 | 20 years | ₹8,65,385 |
| ₹1,00,000 | 25 years | ₹14,42,308 |
Three formulas — which applies to you?
| Employee type | Formula |
|---|---|
| Private, covered by the gratuity law (10+ employees) | Wages × 15/26 × years (more than 6 months rounds up) |
| Private, not covered | Half a month’s average salary (last 10 months) per completed year — employer policy may differ |
| Central Government | ¼ of emoluments for each completed six-month period, max 16.5 × emoluments, capped at ₹25 lakh |
Labour codes and gratuity: because “wages” must now be at least 50% of total pay, gratuity can be higher for employees whose basic pay used to be a small share of CTC.
Frequently asked questions
How is gratuity calculated?
For covered employees: last drawn basic + DA × 15 × years of service ÷ 26. More than 6 months in the final year counts as a full year.
What is the tax-free limit on gratuity?
₹20 lakh for non-government employees (lifetime). Government employees’ gratuity is fully exempt.
Can I get gratuity before 5 years?
Yes in case of death or disablement, and fixed-term employees qualify after 1 year under the labour codes. Otherwise permanent employees need 5 years of continuous service.
What is the maximum gratuity for Central Government employees?
₹25 lakh since 1 January 2024.
Official links
Use only these government websites. HumainOne is not connected to any of them.
- Ministry of Labour & EmploymentCode on Social Security, gratuity rules
- Department of Pension & Pensioners’ WelfareCentral Government gratuity
- Income Tax DepartmentTax exemption on gratuity
Disclaimer: HumainOne is an independent information website. We are not affiliated with UIDAI, the Income Tax Department, EPFO, NPCI, the Election Commission, the Government of Maharashtra or any government body. We do not accept applications, documents or fees. Information is checked against official sources on the date shown but rules change — always confirm on the official website before acting. Calculators give estimates, not official figures, and this is not tax or legal advice.