Gratuity Calculation Confusion: Which Salary Components Should Be Included?

Hi to all,

Can anybody suggest to me which of the following heads should be included for calculating gratuity?

- Basic salary
- HRA
- City compensatory allowances
- DA
- Medical allowances
- Conveyance

Thanks,
Armaan

While calculating gratuity, you should use BASIC & DA if DA is a part of the salary; otherwise, only basic. Find below the calculation of Gratuity:

Basic * 15 * total years of service / 26

Where:

- Basic = last basic drawn
- 15 = 1/2 of basic
- Total years = total years of service (should not be less than five)*
- 26 = 26 days (26 working days in a month)

*In the case of death, gratuity should be paid from the Date of Joining (DOJ) till the last day. Also, in the case of normal resignation, it should be a minimum of five years of continuous employment.

Trust this helps.

Regards,
Shiva