What is the formula for gratuity in India?

Gratuity = (15 ÷ 26) × last drawn basic salary × years of service. The 26 represents working days in a month; 15 represents 15 days per year. Each completed year of service (6+ months counts as 1 year) counts toward the calculation.

Who is eligible for gratuity?

Employees who have completed at least 5 years of continuous service with the same employer. On retirement, resignation, or death/disability. In case of death or disability, the 5-year condition is waived.

Government employees: fully exempt. Private employees under Gratuity Act: exempt up to Rs 20 lakh. Private employees not under Act: exempt up to the least of: 15 days salary per year, half month's average salary per year, or Rs 20 lakh.

India Gratuity Calculator (Payment of Gratuity Act)

Calculate gratuity entitlement under the Payment of Gratuity Act 1972. Formula: (15 ÷ 26) × last drawn salary × years of service. Maximum: Rs 20 lakh. Taxable gratuity above Rs 20 lakh. Forfeiture rules for misconduct.

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Frequently Asked Questions

What is the formula for gratuity in India?

Who is eligible for gratuity?

Is gratuity taxable?