Dear Raj,
The term "wages" has been defined under The Payment of Wages Act, 1972 in section 2(s) as all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are payable to him in cash and includes dearness allowance but does not include any bonus, commission, HRA, overtime wages and any other allowance.
From the above definition laid down in the Act, you will find that Gratuity is not payble on Gross Pay because the wages under the Act has specifically excluded allowances which are an integral part of gross Pay.
Ashok