Your gratuity, on the wage the Code actually defines.

The working

How the figure is arrived at

Encoded from the Code on Social Security, 2020 (No. 36 of 2020) and the Code on Wages, 2019 (No. 29 of 2019), both brought into force on 21 November 2025 — the Social Security Code by S.O. 5319(E), 21 November 2025 and the Code on Wages by S.O. 5322(E), 21 November 2025.

• The divisor is twenty-six, and it is not a rounding of thirty. Code on Social Security 2020, s.53, Explanation 3 says it outright: “For the purposes of this section, it is clarified that in the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.” A month of wages divided by twenty-six working days, times fifteen days, is 57.7% of a month’s wages for each year of service — not half a month, which is the figure people expect.
• A part year counts only where it exceeds six months. Code on Social Security 2020, s.53(2) pays “for every completed year of service or part thereof in excess of six months”. Six months exactly is not in excess of six months, so it does not round up. Most published calculators implement this as “six months or more”, which is a whole extra year for anybody sitting on the boundary.
• The wage is the statute’s, not the payslip’s. The first proviso to Code on Wages 2019, s.2(y) adds the excess back to wages by operation of law where the excluded components exceed half of your whole remuneration. It does not wait for your employer to restructure anything. That is why this page can compute an entitlement rather than a suggestion, and why it shows you both numbers.
• The one-half test does not cover everything. The one-half test is run over clauses (a) to (i) only. Gratuity — clause (j) — and retrenchment compensation and other retirement benefits — clause (k) — are outside it, so they neither count towards the half nor get added back.
• The ceiling is a notification, not a section. Section 53(3) sets no figure of its own — it caps gratuity at 'such amount as may be notified by the Central Government'. The Ministry of Labour and Employment's own FAQ on the Labour Codes states the notified maximum is Rs 20 lakh, and the Rs 20,00,000 notified under the repealed 1972 Act is carried forward by s.164(2)(a). We publish the figure on that basis and not as a number in the Code, because it is not one.

Two instruments, on purpose — and the document that disagrees with us

Gratuity on this page is cited to the Code on Social Security, 2020 (No. 36 of 2020). EPF is cited to the Employees’ Provident Funds Scheme, 2026. That looks like an inconsistency, and it is the most carefully checked thing here.

The schemes every EPF calculator on the internet still cites were superseded on 29 June 2026. Three new schemes were notified that day under s.15(1) of the Code on Social Security, 2020 and came into force on publication: the Employees' Provident Funds Scheme, 2026 (G.S.R. 525(E)) in supersession of the EPF Scheme, 1952; the Employees' Deposit-Linked Insurance Scheme, 2026 (G.S.R. 526(E)); and the Employees' Pension Scheme, 2026 (G.S.R. 527(E)), which supersedes both the EPS 1995 and the Family Pension Scheme 1971. Nothing outside those notifications did this and nothing scheduled it: the power in s.15(1) was commenced, the Central Government used it, and a scheme notified under it takes effect on publication. So since 29 June 2026 a citation to 'para 26A of the EPF Scheme, 1952' has named a superseded instrument, and a citation to 'the EPS, 1995' has named a scheme that ceased to exist that day.

Three facts, each read from a government document, and one reading that joins them. FACT ONE: s.164(1) of the Code lists nine enactments it repeals, and the commencement notification S.O. 5319(E) brought into force only 'Items 1 and 2 and items 4 to 9'. Item 3 is the EPF & MP Act, 1952 — the single exclusion — so that Act stands unrepealed, while the Payment of Gratuity Act, 1972 at item 6 does not. FACT TWO: of s.16, the Code's contribution section, S.O. 5319(E) commenced only clause (c) of sub-section (1), the deposit-linked-insurance clause. The provident-fund rate in s.16(1)(a) and the pension diversion in s.16(1)(b) were not commenced. FACT THREE: s.15(1) and (2) WERE commenced, and on 29 June 2026 the Central Government used s.15(1)(a) to notify the Employees' Provident Funds Scheme, 2026 in supersession of the 1952 Scheme — and that Scheme fixes the rate itself, at twelve per cent, in para 18(2). THE READING: the rate a payroll actually runs on is the one in the 2026 Scheme, framed under a commenced section, rather than the one in the uncommenced s.16(1)(a) or in the unrepealed 1952 Act. No government publication states that in terms, which is why this is graded medium while each underlying fact is high.

What cuts against it. The Ministry of Labour's own Compliance Handbook for Employers describes the Code's s.16 as operative — 'The employer must contribute 10% of the employee's wages towards the Provident Fund scheme. (Section 16)'. That conflicts with the gazette notification, which did not commence s.16(1)(a). A gazette notification governs over a handbook, and the handbook carries the Ministry's standard disclaimer that it is not a legal document. We follow the notification, cite the Scheme that does fix the rate, and say all of this out loud rather than quietly picking a side.

So we publish the conclusion with its grade attached: EPF now runs under the Code on Social Security, 2020 read with the Employees' Provident Funds Scheme, 2026 — but the EPF & MP Act, 1952 was never actually repealed, and the Code's own rate clause has never been commenced. Each fact underneath it is a quotation from a gazette notification, from the Code or from the Scheme; the proposition joining them is our reading, graded medium, and no government publication states it in terms. If you are an employer taking a compliance position, read the documents rather than taking ours — they are linked from the methodology page.

What the taxman does with it

Under the Income-tax Act, 2025 gratuity is a DEDUCTION from salary income under s.19, not an exemption under s.11. That is a real change of structure, not a renumbering: the 1961 Act's s.10(10) kept gratuity out of total income, and s.19(1) instead allows it as a deduction in computing income under the head Salaries. Sl. No. 5 covers gratuity computed under the gratuity statute; Sl. No. 6 covers any other gratuity and is the entry the notified monetary limit attaches to. The mapping is on our section 10(10) page, read from the enacted text rather than from a summary.

• The limit is lifetime, not per job. The limit is lifetime and cumulative, not per employer and not per job: s.19(2)(a) allows the notified limit REDUCED by every rupee of gratuity already allowed as an exemption or a deduction in an earlier tax year. Gratuity exempted under the 1961 Act before 1 April 2026 counts against it.
• The figure is not in the 2025 Act either. The Rs 20,00,000 figure is not in the Income-tax Act, 2025 either. Sl. No. 6(b) leaves it to an 'amount specified by the Central Government, by notification'. The Rs 20,00,000 notified for the 1961 Act by S.O. 1213(E) dated 8 March 2019 continues under the savings clause in s.536(2)(j); we found no fresh notification issued under the 2025 Act.
• Gratuity to a family on death stayed an exemption. Gratuity received by a widow, children or dependants on the death of an employee is the one gratuity limb that remained an exemption rather than becoming a deduction. It sits at Income-tax Act 2025, s.11 read with Schedule III (Table: Sl. No. 38).
• One loose thread, which we are not going to paper over. Sl. No. 5 of the s.19(1) Table refers to gratuity received under the Payment of Gratuity Act, 1972 and to the computation in s.4(2) and (3) of that Act. That Act was repealed on 21 November 2025, four months before the Income-tax Act, 2025 commenced. We have found no government clarification of how the reference now reads, so we state it as the statute states it and do not assert a resolution.
• Provident-fund interest is a separate question with a separate threshold. Interest on your own contributions is outside total income only up to ₹2,50,000 of contribution in a year — ₹5,00,000 where the employer contributes nothing — counting contributions from 1 April 2021 onwards, under Income-tax Act 2025, s.11 read with Schedule II (Table: Sl. No. 4) and Rule 277, Income-tax Rules, 2026. A separate rule taxes the EMPLOYER's contributions above Rs 7,50,000 a year, aggregated across provident fund, superannuation and the National Pension System, as a perquisite. That is a ceiling on contributions by somebody else; the Rs 2,50,000 here is a threshold on your own.

This calculator computes the gratuity, not the tax on it. The CTC calculator and the regime advisor handle salary tax.

What this page does not model

Each of these makes somebody’s real entitlement different from what this page shows, so they are listed here rather than left to be discovered. In two of them the reason is simply that we have not read a government source, and we publish a figure after reading it, not before.

• What your taxable provident-fund interest actually is — Interest on YOUR OWN contributions above the threshold is taxable — the threshold is measured against the contribution, not against the interest, and it counts only contributions made on or after 1 April 2021. The higher figure applies where the employer contributes nothing to the fund, which is the case for a statutory or public provident fund rather than for salaried EPF. Rule 277 of the Income-tax Rules, 2026 prescribes the two-account mechanism this is computed through. We do NOT compute your taxable interest: it depends on the whole history of your contributions since April 2021, which this page does not ask for and could not check.
• Next year’s rate of interest — 8.25% is the rate declared for the financial year 2025-26 — the most recent one the Central Government has approved. The rate for 2026-27 has not been declared; it is normally announced around February or March. A projection therefore runs the last declared rate forward, which is an assumption about the future and not a forecast of it: the Board sets a rate every year and it has moved before.
• The employer’s administrative and insurance charges, as rates — Employers pay administrative and insurance charges on top of their 12%. Not one rupee of it is credited to a member's account, so this calculator leaves it out of everything an employee sees: adding it would inflate a balance nobody can ever withdraw. We also do not quote the rates. Para 29(1) of the 2026 Scheme and para 5(2) of the 2026 insurance scheme both leave them to be notified by the Central Government and contain no figures, and we could not find a notification issued under either since they came into force on 29 June 2026. The often-quoted 0.5% rests on instruments made under schemes that have now been superseded, and the Code caps the insurance contribution only at 'not being more than one per cent. of the wages'.
• Continuous service, counted in days — section 54 deems a year of continuous service from 240 days actually worked — 190 in a mine below ground or in an establishment working under six days a week — and has its own rules for lay-off, leave and maternity leave. We take the years and months you enter at face value. If your service was broken, section 54 decides whether the year still counts, and this page will not.
• Seasonal establishments and piece-rated employees — gratuity in a seasonal establishment is 7 days' wages for each season, not fifteen; and for a piece-rated employee daily wages are the average of the last three months, overtime excluded. Both are in the provisos to section 53(2). This page computes for a monthly-rated employee, which is what Explanation 3 is written for.
• Gratuity on death or disablement — the five-year qualifying period does not apply, the money goes to a nominee or heir rather than to the employee, and the tax treatment differs — it is an exemption under the Income-tax Act 2025 rather than a deduction. It is a different calculation for a different person and we do not fold it into this one.
• Government employees — Explanation 1 to section 53 puts anyone holding a post under the Central or a State Government, governed by other rules for gratuity, outside this Chapter entirely. Their gratuity is computed under their own pension rules.
• Whether your employer is covered at all — the First Schedule applies the gratuity Chapter to every factory, mine, oilfield, plantation, port and railway company, and to every shop or establishment employing ten or more. A smaller employer may still owe gratuity by contract — section 53(5) preserves better terms — but not by this Chapter.
• Whether the pension scheme applies to you at all — The pension scheme is closed to anyone joining above the wage ceiling. Para 7(1)(i) of the Employees' Pension Scheme, 2026 applies it to an employee who becomes a member of the provident-fund scheme on or after the Scheme's notification and 'whose wages on such date is less than or equal to wage ceiling notified by the Central Government' — the same device the 1995 Scheme used. For someone who joins above the ceiling, nothing is diverted and the employer's whole share goes to the fund. This calculator applies the diversion by default, because it is the common case for anyone already a member; if you joined above the ceiling, your fund grows faster than shown and your pension does not exist.

Questions

Questions people actually ask

How is gratuity calculated under the new labour codes?

Fifteen days' wages for every completed year of service, and for a part year longer than six months. Explanation 3 to section 53 of the Code on Social Security, 2020 says how to get the fifteen days for a monthly-rated employee: divide the monthly wages last drawn by twenty-six, and multiply by fifteen. So the formula is (wages ÷ 26) × 15 × completed years. What changed on 21 November 2025 is not that formula — it is the word "wages". Under the Code on Wages, 2019 the components the statute excludes cannot exceed half your remuneration; where they do, the excess is added back. A payslip with basic at 40% therefore produces a gratuity wage of 50%, and a calculator that multiplies the 40% figure understates the answer.

What is the 50% basic rule, and does it really apply to gratuity?

It is the first proviso to section 2(y) of the Code on Wages, 2019, mirrored word for word in section 2(88) of the Code on Social Security, 2020. In the statute's own words: "Provided that, for calculating the wages under this clause, if payments made by the employer to the employee under clauses (a) to (i) exceeds one-half, or such other per cent. as may be notified by the Central Government, of the all remuneration calculated under this clause, the amount which exceeds such one-half, or the per cent. so notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause". It applies to gratuity because gratuity is paid under the Social Security Code and that Code carries the same definition. One detail most explainers drop: the one-half test is run over clauses (a) to (i) only, so gratuity itself and retrenchment compensation sit outside the test — they are neither counted towards the half nor added back.

Is the ₹20 lakh gratuity limit in the law?

Not as a figure, no — and this is worth knowing because almost every published calculator attributes it to a section. Section 53(3) of the Code says only that gratuity "shall not exceed such amount as may be notified by the Central Government". The Code contains no rupee amount. The ₹20,00,000 notified under the repealed 1972 Act is carried forward by the saving in section 164(2)(a), and the Ministry of Labour's own FAQ on the Labour Codes states the current maximum is ₹20 lakh. We apply ₹20,00,000 on that basis, and we say what the basis is rather than pointing at a section that does not contain it.

Do I get gratuity before five years?

Not as an ordinary employee: section 53(1) requires continuous service of not less than five years. Three situations lift that. Death or disablement — the second proviso removes the qualifying period. A fixed-term contract — the same proviso removes it on expiry of the term, and the third proviso to section 53(2) requires payment on a pro rata basis. And a working journalist, for whom the first proviso reads "five years" as three. The Code itself sets no minimum period for a fixed-term employee at all; the Ministry's FAQ and PIB's factsheet both state one year. That is the Ministry's position rather than statutory text, so this calculator computes pro rata from the service you enter and tells you where the one-year figure comes from.

Why does this page cite a 2026 Scheme for EPF and the 2020 Code for gratuity?

Because the provident-fund schemes were replaced on 29 June 2026 and most published calculators have not noticed. Three new schemes were notified that day under section 15(1) of the Code on Social Security, 2020: the Employees' Provident Funds Scheme, 2026 in supersession of the 1952 Scheme, a new deposit-linked insurance scheme, and the Employees' Pension Scheme, 2026 in supersession of the EPS, 1995. So "para 26A of the EPF Scheme, 1952" now names a superseded instrument and "the EPS, 1995" names a scheme that no longer exists. The 12% is in para 18(2) of the 2026 Scheme and the 8.33% pension diversion is in para 4(1) of the pension one. Gratuity is different again: it moved to Chapter V of the Code itself when section 164(1) repealed the Payment of Gratuity Act, 1972 on 21 November 2025. Two subjects, two instruments, and the section below explains the one part of this we grade as a reading rather than a citation.

Is the interest on my provident fund taxable?

Above a threshold, yes — and the threshold is on the CONTRIBUTION, not on the interest. Under Income-tax Act 2025, s.11 read with Schedule II (Table: Sl. No. 4) interest is not excluded from total income where it is attributable to your own contributions made on or after 1 April 2021 and those contributions exceed ₹2,50,000 in a financial year — or ₹5,00,000 where your employer contributes nothing to the fund, which is not the ordinary salaried case. Rule 277, Income-tax Rules, 2026 prescribes the two-account mechanism it is computed through. This page does not compute it: doing so needs your whole contribution history since 1 April 2021, which we do not ask for. A separate rule taxes the EMPLOYER's contributions above Rs 7,50,000 a year, aggregated across provident fund, superannuation and the National Pension System, as a perquisite. That is a ceiling on contributions by somebody else; the Rs 2,50,000 here is a threshold on your own.

Is my gratuity taxable?

Up to a limit, no. Under the Income-tax Act, 2025 gratuity is a deduction from salary income under section 19(1) — at serial numbers 3 to 6 of its table — rather than an exemption under section 11, which is a change of structure from the 1961 Act, not just a change of number. The limit is lifetime and cumulative, not per job: section 19(2)(a) allows the notified limit reduced by every rupee of gratuity already allowed in an earlier year, and gratuity exempted under the old Act before 1 April 2026 counts against it. This page does not compute your tax on it — it computes the gratuity. Take the figure to whoever files your return.

Why is only part of my employer’s 12% going into my provident fund?

Because 8.33% of wages, up to a pension wage of ₹15,000 a month, is diverted from the employer's share to the pension scheme, and the remainder is what reaches the fund. On the worked example above that is ₹1,250 a month to the pension scheme and ₹3,251 to the fund. It is the commonest reason a person's real balance grows more slowly than "24% of my basic" suggests, and it is why this page shows the two separately rather than adding them.

Does my salary get sent anywhere?

No. The whole computation runs in your browser and there is no server to send it to. The share link puts your figures in the part of the URL after the "#", which browsers never send to a server at all — so the cookieless Cloudflare beacon that counts this page sees the URL without them. /privacy/ describes exactly what that beacon carries.

The rest of your payslip

This page answers what your service is worth when you leave, and what is going into your provident fund while you stay. The CTC to in-hand calculator answers what reaches your account each month — the same 50% wage floor, applied to the whole payslip — and the old vs new regime advisor answers which regime costs you less. Every dataset, source and verification date is on the methodology page, and what this site is and is not is on the disclaimer.