Free calculator · Labour Codes
Gratuity calculator
Gratuity on leaving, worked the way the Code on Social Security says since 21 Nov 2025: on the Labour Codes' wage, 15 days' wage for each year of service, after five years (one year for fixed-term staff), up to ₹20 lakh.
Gratuity due
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These results are estimates for planning, not legal or tax advice. Your employer's own scheme may pay more; a court or the authority decides disputes.
Dexta PayDexta Pay does this for every employeeFull and final settlements with gratuity on the Labour Codes' wage, fixed-term staff after a year, the due dates, and the tax-free part in the year's TDS.How it's worked out
- The wage: since 21 Nov 2025 gratuity is on the Labour Codes' wage: basic, DA and retaining allowance, plus whatever HRA and the other allowances come to above half of all pay (the Ministry's FAQ). A special allowance is treated as left out up to that half, as the FAQ does.
- The formula: last month's wage ÷ 26 × 15 × years of service. Each completed year counts, and a part year of more than six months counts as a whole one.
- Who qualifies: permanent staff after five years of continuous service; fixed-term staff after one year, pro rata. On death or disablement there's no minimum.
- The cap: ₹20 lakh. An employer may pay more, but the part above the cap is ordinary taxable salary.
- Tax: under section 19 of the Income-tax Act 2025, gratuity worked out under the gratuity law is tax-free up to that amount and ₹20 lakh in a lifetime, less what was tax-free before. Government employees' gratuity is fully tax-free.
- Service here is calendar time from the joining date to the last working day. The law's own test of continuous service (days actually worked, breaks, and the like) can differ in a borderline case.
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Dexta Pay works out gratuity, leave encashment and the final pay on the Labour Codes' wage, and shows the due dates the Code on Wages sets.