Gratuity Calculator India 2026
Calculate gratuity as per Payment of Gratuity Act / Code on Social Security 2020
The 15/26 vs 15/30 Difference — Why Your Gratuity Calculation Formula Matters
An employee with ₹60,000 monthly basic and 10 years of service will get ₹3,46,154 in gratuity from a company covered under the Payment of Gratuity Act (using the 15/26 formula). The same employee at a company not covered by the Act gets ₹3,00,000 (using 15/30). That's a ₹46,154 difference — from a single change in the divisor. The "26" represents working days in a month (excluding Sundays in a 4-week month). "30" is the calendar month count. Employees at companies with 10+ employees use 26; smaller companies and some uncovered establishments use 30. Always confirm which formula your employer uses before accepting an exit offer or negotiating a settlement.
The 15/26 Formula — Step by Step
| Component | Explanation | Example (₹50,000 basic, 10 yrs) |
|---|---|---|
| Salary base | Basic + DA only. No HRA, special allowance, bonus. | ₹50,000/month |
| Daily wage | Monthly salary ÷ 26 | ₹50,000 ÷ 26 = ₹1,923 |
| Per-year gratuity | Daily wage × 15 days | ₹1,923 × 15 = ₹28,846 |
| Total gratuity | Per-year × completed years | ₹28,846 × 10 = ₹2,88,462 |
| Simplified formula | (Basic+DA) × 15/26 × years | ₹50,000 × 15/26 × 10 = ₹2,88,462 |
Rounding Rules for Partial Years
| Tenure | Gratuity Years Counted |
|---|---|
| 10 years 3 months | 10 years (3 months < 6 months, rounded down) |
| 10 years 7 months | 11 years (7 months > 6 months, rounded up) |
| 5 years 0 months | 5 years (eligible) |
| 4 years 11 months | Not eligible (below 5 years — exception: death/disability) |
| Fixed-term: 1 year 4 months | 1 year (Code on Social Security 2020: FTE eligible after 1 year) |
New Labour Code Change — Fixed-Term Employees (November 2025)
The Code on Social Security 2020, which came into effect on 21 November 2025, introduced a significant change: fixed-term contract employees are now eligible for pro-rata gratuity after just 1 year of service — removing the 5-year barrier entirely for contract workers. If you were hired on a 2-year contract that ended, you are entitled to gratuity calculated on the period served. This is a major shift, particularly for IT services, manufacturing, and logistics companies that rely on fixed-term staff.
Gratuity at Common Salary Levels (10 Years Service)
| Monthly Basic + DA | Gratuity (Covered by Act) | Tax-Free? |
|---|---|---|
| ₹15,000 | ₹86,538 | ✅ Fully (under ₹20L) |
| ₹30,000 | ₹1,73,077 | ✅ Fully |
| ₹50,000 | ₹2,88,462 | ✅ Fully |
| ₹1,00,000 | ₹5,76,923 | ✅ Fully |
| ₹2,00,000 | ₹11,53,846 | ✅ Fully |
| ₹3,46,667 (breakeven) | ₹20,00,000 | Exactly at cap |
| ₹4,00,000 | ₹23,07,692 | ⚠️ ₹3,07,692 taxable |