Gratuity in India: How Is It Calculated and What Are the Conditions?

Gratuity Calculation in India

What is the basic formula for the calculation of Gratuity in India? What are the conditions for Gratuity? In which expenditure category does Gratuity fall?

Gratuity Calculation Formula

Gratuity = (last drawn gross salary/26 working days) * 15 days * number of years of service.

Eligibility for Gratuity

4 years and 6 months is the minimum period of service required for gratuity eligibility.

As per the calculation, gratuity is calculated as \((\text{Basic} + \text{DA}) \times 15 \times \text{No of Years of Service}\) / 26. Kindly correct me if I am wrong.

Where I have the knowledge, the minimum period of eligibility is 4 years and 8 months, and the calculation is: Basic salary x 15 days for a year x years of service / 26.

Regards

In some companies, 4.6 years are also considered an eligible period for gratuity, while some companies keep the eligibility period of 4 years plus 240 days of the 5th year (which is around 8 months). A few companies maintain the eligibility as 5 years. Kindly confirm with your HR Department regarding the policy they have in place for Gratuity.

Hi Sriram, it is basic salary, not gross salary. Please check. AKS

Gratuity Calculation Formula

The simple and most used formula for gratuity is as follows:

Basic * 4.81% * number of months (here it is not less than 60 months, which is equal to 5 years).

Regards,
Nobal Kishor

Gratuity = Last Drawn Salary × 15/26 × No. of Years of Service

Notes:

- The ratio 15/26 represents 15 days out of 26 working days in a month.
- Last drawn salary = Basic Salary + Dearness Allowance.
- Years of Service are rounded down to the nearest full year. For example, if the employee has a total service of 20 years, 10 months, and 25 days, only 20 years will be factored into the calculation.

Regards

The formula for calculating gratuity in India is [{(DA + Basic Pay) / 26} * 15 * Number of Years of Service]. In this formula, 26 represents the number of working days in a month. For more information and assistance with gratuity calculation, you can refer to https://www.easycalculation.com/fina...tion-india.php.

Thank you.