Gratuity & In-hand Salary Calculator
runs in your browserGratuity under the new labour codes — 15/26 of a month’s wage a year, the 50% wage rule, fixed-term after one year — and CTC to in-hand pay for FY 2026-27.
Gratuity
Last month’s pay
The Code counts all pay as wages except listed exclusions such as HRA, conveyance, bonus and commission, so a general special allowance reads as wages. That reading is new and untested; switch it off to treat it as an exclusion instead, as some employers do.
Service
Give the basic pay and DA.
Under the Code on Social Security, 2020, in force since 21 November 2025. Some employers apply the new wage definition only to service after that date; check your own figures with your employer.
about this tool
Gratuity
Gratuity is a lump sum paid when you leave a job after long enough service, or on retirement, death or disablement. It is worked out as:
last monthly wage × 15 × years of service ÷ 26
— fifteen days' wages for each year, at a 26-working-day month. A final part-year of more than six months counts as a full year, so 7 years 8 months counts as 8, and the amount payable stops at ₹20 lakh.
What changed in November 2025
The Code on Social Security, 2020 replaced the Payment of Gratuity Act on 21 November 2025. Two things changed:
- The wage it is worked on. "Wages" now means all pay except a list of exclusions: HRA, conveyance, bonus, commission, overtime, the employer's PF and a few more. If those exclusions come to more than half of all pay, the excess counts as wages too. Enter your pay in its three parts and the calculator applies the rule.
- Fixed-term contracts. A fixed-term employee now qualifies after one year instead of five, and is paid in proportion to the time served.
Permanent employees still need five years' continuous service, except on death or disablement. Service is counted from the day you joined to your last working day, both included. Some courts have read the five years as four years and 240 days worked in the fifth; the calculator does not, so if you are just short, ask.
The special allowance question
The Code counts everything not on the exclusion list, and a general "special allowance" is not on it, so on a plain reading it is wages. That reading is new and untested in court, and some employers still pay on basic and DA, or apply the new definition only to service after November 2025. Count special allowance as wages switches between the two, so you can see what is at stake.
In-hand salary
Give your CTC and the share of it that is basic pay and DA — under the new codes, usually 50% or more — and the calculator works down to what reaches your bank account:
- The employer's PF (12% of basic) and the gratuity set aside (4.81% of basic) come out of the CTC, if your employer counts them in it.
- What is left is gross salary. From it come your own PF (12% of basic), professional tax (up to ₹2,500 a year, by state) and income tax.
- Income tax is worked under the new regime for FY 2026-27: gross pay less the ₹75,000 standard deduction, nil up to ₹4 lakh, then 5% for each ₹4 lakh band up to 25%, and 30% over ₹24 lakh, with 4% cess. Taxable income up to ₹12 lakh pays nothing, thanks to the rebate, and marginal relief smooths the step just above it.
PF can be worked on the full basic, or on the ₹15,000-a-month PF wage ceiling many employers use.
It is a guide, not a payslip: employers split CTC their own way, bonuses and variable pay change the picture, and the old regime with its deductions is not covered. Everything is worked out in your browser.
For a loan's EMI or a percentage, use the percentage and EMI calculator; for savings growing each month, compound interest and SIP.
questions
- How is gratuity calculated?
- Fifteen days’ wages for every year of service, at the last month’s wage divided by 26 working days: wage × 15 × years ÷ 26. A final part-year of more than six months counts as a full year, so 7 years 8 months counts as 8. The amount payable is capped at ₹20 lakh. On ₹40,000 a month for 10 years, that is ₹2,30,769.
- What changed under the new labour codes?
- The Code on Social Security, 2020 came into force on 21 November 2025. The formula is the same, but "wages" now means all pay except a list of exclusions — HRA, conveyance, bonus, commission, overtime, the employer’s PF and a few more — and if those exclusions come to more than half of all pay, the excess counts as wages too. Fixed-term employees now qualify after one year rather than five, and are paid in proportion to the time served.
- Does special allowance count for gratuity?
- On a plain reading of the Code, yes: it counts everything not on the exclusion list, and a general special allowance is not on it. That reading is new and has not been tested in court, and some employers still pay on basic and DA alone, or apply the new definition only to service after 21 November 2025. The calculator shows it both ways with one switch.
- Is gratuity taxable?
- For a government employee, no. For anyone else, gratuity received is free of income tax up to ₹20 lakh across a working life; anything above is taxed as salary. Since the payable amount is itself capped at ₹20 lakh, most people pay no tax on it.
- How is in-hand salary worked out from CTC?
- The employer’s PF (12% of basic) and the gratuity set aside (4.81% of basic) come out of the CTC first, if your employer counts them in it, leaving gross salary. From that come your own PF, professional tax (up to ₹2,500 a year, depending on the state) and income tax under the new regime, worked on gross pay less the ₹75,000 standard deduction.
- How much salary is tax free in FY 2026-27?
- Under the new regime, taxable income up to ₹12 lakh pays no tax, thanks to a rebate of up to ₹60,000; with the ₹75,000 standard deduction, that is a salary of up to ₹12.75 lakh. Just above, marginal relief means the tax, before cess, is never more than the income over ₹12 lakh. Budget 2026 left the slabs as they were: nil to ₹4 lakh, then 5% for each ₹4 lakh up to 25%, and 30% over ₹24 lakh, with 4% cess.