Calculate Your Retirement Benefits Accurately
Under Indian law (Payment of Gratuity Act, 1972), gratuity is a lump-sum retirement benefit paid by employers to qualifying employees. Knowing your exact payout—and its tax implications—is essential for your financial independence.
The 2026 Labour Code Updates
The implementation of the new Social Security Codes introduced structural shifts to eligibility. Fixed-Term Employees are now eligible after just 1 year of continuous service. Furthermore, under the 50% Wage Rule, your basic salary must constitute a minimum of 50% of your total CTC, maximizing your final gratuity payout.
Frequently Asked Questions
How is gratuity calculated for exactly 5 years and 7 months?
As per the Payment of Gratuity Act, service exceeding 6 months is rounded up to the next year. Therefore, 5 years and 7 months will be calculated as 6 full years of service.
Is gratuity tax-free in India?
For private sector employees covered under the Act, gratuity is tax-exempt up to a maximum lifetime limit of ₹20 Lakhs. Any amount exceeding this cap is treated as taxable ex-gratia.
Are contract employees eligible for gratuity?
Yes. Under the new Labour Codes, fixed-term contract employees are now eligible for gratuity after completing just 1 year of continuous service, instead of the traditional 5 years.