# Gratuity Calculator > Gratuity under the Code on Social Security, 2020, which replaced the Payment of Gratuity Act: the 15/26 formula, six-month rounding, fixed-term gratuity and the taxable part. Runs in your browser. Source: https://www.revquix.com/tools/gratuity-calculator Cost: free, no signup --- Fifteen days' wages for every completed year, with the rounding rule and the exemption cap applied. Calculated for FY 2026-27 under the Code on Social Security, 2020 (section 53), which replaced the Payment of Gratuity Act on 21 November 2025. ## At a glance - Takes: Last drawn basic plus DA, and your completed years of service - Returns: Gratuity payable, split into the exempt and taxable parts - Basis: Code on Social Security s.53, 15/26, with the exemption ceiling - Privacy: Runs in your browser - no figure is sent anywhere ## The formula, and the three things people get wrong Gratuity for a covered employer - under the Code on Social Security, 2020, section 53 since 21 November 2025, and the Payment of Gratuity Act, 1972 before it - is fifteen divided by twenty-six, multiplied by your last drawn basic plus dearness allowance, multiplied by your completed years of service. Twenty-six is the assumed number of working days in a month - thirty days less four Sundays - and fifteen days' wages is the statutory entitlement for each year worked. Three errors account for almost every wrong answer. The first is using gross salary or CTC instead of basic plus DA, which inflates the result by roughly two and a half times. The second is using 15/30 for a covered employer, which understates it by about thirteen per cent. The third is mishandling the part-year. ## The six-month rounding applies only to covered employers If your employer is covered by the Act, a part-year of six months or more rounds the year up. Six years and six months counts as seven; six years and five months counts as six. If your employer is not covered - fewer than ten employees - there is no rounding up at all, and the formula uses 15/30 on the average of your last ten months' salary rather than the last drawn figure. - Covered: 15/26 × last drawn basic + DA × completed years, part-year of six months or more rounds up - Not covered: 15/30 × average of last ten months × completed years, no rounding up - Five years of continuous service is normally required, waived on death or disablement - A fixed-term employee qualifies after 1 year, paid pro rata - The statutory exemption cap applies to the tax-free portion, not to what can be paid ## What the labour codes changed The formula survived the move intact; two rules are new. A fixed-term employee is eligible after one year of service under the contract rather than five, paid pro rata, with a further part-year of six months or more rounded up. And wages now have a floor. Allowances excluded from wages - HRA, conveyance, commission and the like - that exceed 50% of your total pay are added back, so a structure with basic under half of pay has a larger gratuity base than basic plus DA - enter your total monthly pay to model it. ## The cap limits the exemption, not the payment The statutory ceiling is a limit on how much gratuity is exempt from tax, not on how much your employer may pay you. An employer is free to pay more, and many do; the excess is simply added to your salary income and taxed at your slab rate. A calculator that caps the payable figure rather than the exempt figure gets this backwards. The exemption now sits in section 19 of the Income-tax Act, 2025 (formerly 10(10)). The ₹20,00,000 ceiling used here is carried forward from the 1961-Act notification; no fresh notification under the 2025 Act has been found. ## What it will not do It will not tell you whether you are entitled to gratuity. Eligibility turns on continuous service as defined by the Code and on your employer's coverage. We compute the formula and show you the eligibility threshold as a note, because someone at four years and seven months is asking precisely because they are deciding whether to stay. It also does not model leave encashment or the separate rules for government employees, who are fully exempt. ## Questions people ask ### Is four years and seven months eligible for gratuity? For a permanent employee, under the plain text of the Code, as under the Act before it, no - five years of continuous service is required, except on death or disablement. Some High Courts have read four years and 240 days as sufficient, but it is not settled nationally. A fixed-term employee is different: 1 year under the contract is enough. ### Is gratuity taxable? For a non-government employee it is exempt up to the statutory ceiling - section 19 of the Income-tax Act, 2025, formerly 10(10) - and anything above that is taxed at your slab rate. Government employees are fully exempt. The ₹20,00,000 ceiling is carried forward from the 1961-Act notification; no fresh notification under the 2025 Act has been found. It applies across your career, not per employer. ### Is gratuity computed on basic or on gross salary? On wages, which is basic plus dearness allowance - not gross and not CTC. Using gross is the most common input error and typically inflates the answer two to three times. One exception under the Code: if your allowances exceed half your total pay, the excess counts as wages too, so the base rises above basic plus DA. ### What if my employer is not covered? The formula changes to 15/30 of the average of your last ten months' salary for each completed year, and part-years are not rounded up. Many employers outside the Act still pay gratuity as a matter of policy, sometimes on the more generous covered formula - check your appointment letter. ### Which period does this calculation apply to? FY 2026-27 (Tax Year 2026-27) under the Income-tax Act, 2025, printed next to the result with the config version. The divisors, the eligibility years and the exemption cap are versioned constants - the cap in particular is raised by notification rather than by the annual Budget, so it changes on its own schedule. ### Do fixed-term employees get gratuity? Yes, since the Code on Social Security took effect on 21 November 2025. A fixed-term employee who serves at least 1 year under the contract is eligible, pro rata to the service, and a further part-year of six months or more rounds up to a whole year. Switch on the fixed-term option on this page to apply it. ### Did the new labour codes change the gratuity formula? No. It is still fifteen days' wages per completed year, 15/26 of monthly wages, with a part-year of six months or more rounded up and five years' service for a permanent employee. What changed is who qualifies - fixed-term employees after one year - and what counts as wages, through the rule that allowances above half of pay are added back.