Gratuity is calculated under the methodology laid down in Payment of Gratuity Act. The amount so arrived if it exceeds beyond Rs.3.50, the employee will get Rs.3.50 lakhs only. If is is less than 3.50 lakhs he will get actual. Now this ceiling has been raised to Rs.10 lakhs. The upper ceiling has been revised several times in the past since then Gratuity Act was passed and came into force. For eligibility, calculation, entitlement one should go through the details of Payment of Gratuity Act.