Formula: (Last salary × 15 × Years of service) / 26. Example: ₹50k salary × 15 × 10 years / 26 = ₹2,88,461. Min 5 years service eligible.
When is gratuity paid?+
On retirement, resignation (after 5 years), termination, death/disability. Must be paid within 30 days of leaving. Delay attracts interest penalty.
Gratuity tax exemption?+
Maximum ₹20 lakh tax-free. Beyond that taxable as salary. Government employees: fully exempt. Calculation differs for different sectors.
Gratuity 5-year rule?+
Eligible after 5 continuous years (4 years 240 days counts as 5 in some High Court rulings). Service must be continuous - frequent breaks may disqualify.
Gratuity if I resign?+
Yes, if completed 5 years. Same formula. Employer must pay within 30 days. Can sue for non-payment via Labor Commissioner. No 5 years = no gratuity.
Death-disability gratuity?+
No 5-year requirement. Family gets gratuity even if employee died with 1 day service. Calculated proportionally. Maximum ₹20 lakh tax-free.
Salary for gratuity calculation?+
Last drawn basic + DA (no allowances). 26 used as days/month (excludes 4 Sundays). 15 days salary per year of service is the formula.
Private vs Government gratuity?+
Private: Payment of Gratuity Act, max ₹20L tax-free, 26-day formula. Govt: Pension Rules, longer service rewards, often higher amounts. Gratuity Act covers most employers.