Gratuity
A lump sum your employer pays when your job ends after enough years of service: 15/26 of your last monthly wage per year.
Gratuity is part of your CTC that you only see when you leave. Read the full rules in gratuity explained, and work out your own figure with the gratuity calculator.
Questions people ask
What is gratuity?
A payment your employer owes you when your job ends after at least 5 years of continuous service, or 1 year for fixed-term employees, under the Code on Social Security, 2020. The 5 years are not needed on death or disablement.
How is gratuity calculated?
Last monthly wage (basic pay plus dearness allowance) ÷ 26 × 15 × years of service, counting any part year over six months as a full year.
Is there a maximum gratuity?
The Labour Ministry's FAQ on the Labour Codes puts the cap at 20 lakh rupees, though an employer can pay more by agreement. For most private-sector staff, the tax-free limit last notified was also 20 lakh rupees over a lifetime.
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