📐 Formula Used
Gratuity = (Basic + DA) × 15/26 × Years of Service 26 = working days/month 15 = days of wages per year of service
Frequently Asked Questions
Who is eligible for gratuity?
An employee is eligible for gratuity after completing 5 years of continuous service with the same employer, as per the Payment of Gratuity Act, 1972.
How is gratuity calculated?
Gratuity = (Last Basic + DA) × 15/26 × Years of Service. The formula uses 26 working days/month and 15 days per year of service.
Is gratuity taxable?
For government employees, gratuity is fully tax-exempt. For private sector employees, gratuity up to ₹20 lakh is tax-exempt (enhanced from ₹10L in 2019).
What if I resign before 5 years?
In most cases, gratuity is not payable if you leave before completing 5 years of continuous service, unless in the case of death or disability.