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Gratuity

The lump sum your employer pays when you leave after long enough service, and how much of it is tax-free.

Gratuity on leaving

Your gratuity is ₹2,76,923

8 counted years × 15/26 × your ₹60,000 monthly wages. All of it is tax-free.

₹
Basic + DA. Under the labour codes, wages must be at least 50% of your total pay.
yrs
mo
Over six months counts as a full year if you’re covered by the Act.
Employer covered by the gratuity law
Employment
Employer
Gratuity
₹2.77L
Tax-free
₹2.77L
Taxable
₹0
How this is calculated

Covered employers pay 15 days’ wages for each year of service, counting a month as 26 working days. Not covered: 15 days per completed year, with a 30-day month.

gratuity = 15 ÷ 26 × ₹60,000 × 8 = ₹2,76,923

Under the labour codes in force from November 2025, fixed-term employees qualify after one year, and wages can’t be less than half of total pay. Statutory gratuity is capped at ₹20 lakh; employers may pay more, but anything above the tax-free limit is taxed.

A guide, not legal or tax advice.