It depends on how the allowance is treated in salary calculation. In my opinion all allowances which can be described in terms of money before hand and as mentioned in the employment contract should be part of salary for all purposes including gratuity calculation. My logic is that if your 'salary' for deduction of loss of pay is gross salary, then it should be the salary for gratuity purpose also. On the other hand, if you get the alliances in full when you take a few days' LOP (leave without pay) then that allowances should not be taken as part of salary but they will be outside the purview of salary. Most of the companies calculate the LOP on total salary/ gross salary and in such cases it should be the gross salary which should attract gratuity.