Your gratuity

Gratuity

₹2,30,769

₹50,000 × 15 ÷ 26 × 8 years

Service	7 years 7 months 14 days
Years counted	8 (part year over 6 months rounds up)
Tax-free	₹2,30,769
Taxable	₹0

Not tax advice. An estimate under the new tax regime and the Labour Codes as reported in Oct 2026; your payslip may differ. Check with your employer or a CA.

Gratuity formula

Gratuity = last drawn monthly basic + DA × 15 ÷ 26 × years of service. That's 15 days' wages for each year, with a month taken as 26 working days. A part year of more than six months counts as a full year, so 4 years 7 months counts as 5.

Who is eligible

Permanent employees need 5 years of continuous service; on death or disablement there is no minimum. Under the Code on Social Security, in force from 21 November 2025, fixed-term employees get gratuity in proportion to service after just 1 year.

Is gratuity taxable?

For private-sector employees, gratuity is tax-free up to ₹20 lakh across your whole career; anything above is taxed as salary. Government employees' gratuity is fully tax-free.

Why CTC shows 4.81% for gratuity

15/26 of a month's basic per year, spread over 12 months, is 4.81% of annual basic. Employers often show it in CTC even though you only get it when you leave after becoming eligible.