Gratuity Calculator Tax Year 2026–27
The gratuity in your CTC and the gratuity you would actually be paid are two different numbers. This works out both.
Your result
Estimates only. Your payslip and your employer's records are the authority. Disclaimer
Two different things are called gratuity
This is the single most common confusion on an Indian offer letter, and it costs people real money when they compare packages.
The CTC line item is an annual provision, usually 4.81% of Basic. That your employer books against a future payment. It inflates your CTC. You never see it in a payslip, and if you leave before qualifying you never see it at all.
The entitlement is what you are actually paid when you leave, after enough continuous service. It is calculated on your last drawn Basic + DA, not on what was provisioned along the way.
The two are unrelated in size. Someone who leaves after four years has had a gratuity provision counted against their CTC every year and receives nothing.
The formula
Last drawn Basic + DA × 15/26 × completed years of service. The 15/26 is fifteen days’ pay for every year, treating a month as twenty-six working days. Gratuity is capped at ₹20 lakh.
What changed in November 2025
The Code on Social Security, 2020 came into force on 21 November 2025 and replaced the Payment of Gratuity Act, 1972. The formula did not change. What did change is that fixed-term employees now qualify after one year of service rather than five, a substantial improvement for contract staff, who previously almost never reached the threshold.
Permanent employees still need five years.
Common questions
Do I lose my gratuity if I leave before five years?
As a permanent employee, yes, five years of continuous service is the threshold, and there is no partial entitlement below it. Any gratuity provision counted inside your CTC in those years is simply not paid out. Fixed-term employees qualify after one year under the Code on Social Security.
Is four years and seven months enough?
Usually not, though it is contested. The threshold is five years of continuous service. Some rulings have treated 4 years and 240 days in the fifth year as qualifying, and some employers apply that reading. Do not count on it when planning an exit.
Is gratuity taxable?
Gratuity received under the statutory framework is exempt up to ₹20 lakh across your working life. Anything above that is taxable as salary. Most people never reach the ceiling.
Should I count gratuity when comparing two offers?
Only if you expect to stay long enough to receive it. A ₹15 lakh CTC that includes a gratuity provision is a smaller cash offer than one that does not, worth around ₹36,000 a year on a typical structure. The salary calculator lets you switch it off to compare like with like.
How we keep this calculator accurate
- Tax rules are the ones in force for Tax Year 2026–27, under the Income-tax Act, 2025 (in force from 1 April 2026).
- EPF and pension figures follow EPFO’s published contribution rules.
- Professional Tax is included only for states where we have a rule we trust, and named as missing where we do not.
- Every assumption behind the estimate is shown on screen and can be changed.
- The calculator runs entirely in your browser. Your salary is never sent anywhere.
Related calculators
In-Hand Salary Calculator
Turn a CTC into an estimated monthly take-home figure.
EPF Calculator
Employee, employer and pension contributions, plus a corpus projection.
VPF Calculator
See what voluntary PF costs you each month and builds over time.
HRA Calculator
Work out how much of your HRA is actually exempt.
Salary Hike Calculator
How much of a raise survives tax and reaches your bank account.
Reverse Salary Calculator
Start from the take-home you want and work back to a CTC.