Gratuity: Your Retirement Benefit
Gratuity is a lump-sum retirement benefit paid by employers to employees who complete a minimum service period. It's calculated based on your last drawn salary and years of service, providing financial security during retirement.
Gratuity Eligibility & Calculation
Employees become eligible for gratuity after completing 5 years of continuous service. The amount is calculated using the formula: (Last Salary × 15 × Service Years) ÷ 26.
Service Rounding: 6+ months in a year counts as a full year for gratuity calculation.
Gratuity Calculation Examples
Here are comprehensive examples showing gratuity calculations for various salary levels and service periods:
| Monthly Salary | Service Period | Completed Years | Eligible | Gratuity Amount |
|---|---|---|---|---|
| ₹15,000 | 4 years 8 months | 5 years | Yes | ₹43,269 |
| ₹20,000 | 5 years | 5 years | Yes | ₹57,692 |
| ₹25,000 | 6 years 3 months | 6 years | Yes | ₹86,538 |
| ₹30,000 | 7 years 9 months | 8 years | Yes | ₹1,38,462 |
| ₹35,000 | 7 years | 7 years | Yes | ₹1,41,346 |
| ₹40,000 | 9 years 4 months | 9 years | Yes | ₹2,07,692 |
| ₹45,000 | 10 years | 10 years | Yes | ₹2,59,615 |
| ₹50,000 | 12 years 6 months | 13 years | Yes | ₹3,75,000 |
| ₹18,000 | 4 years 5 months | 4.5 years | No | ₹0 |
| ₹22,000 | 4 years 11 months | 5 years | Yes | ₹63,462 |
| ₹28,000 | 8 years 7 months | 9 years | Yes | ₹1,44,615 |
| ₹55,000 | 15 years 2 months | 15 years | Yes | ₹4,80,769 |
| ₹60,000 | 18 years 8 months | 19 years | Yes | ₹6,57,692 |
Key Points to Remember
Tax Benefits
Gratuity is tax-exempt up to ₹20 lakh. Any excess amount is taxable.
Payment Timeline
Employers must pay within 30 days of gratuity becoming due.
Salary Components
Includes basic pay, DA, and regular allowances (excludes HRA, LTA).
Nomination
Always nominate a beneficiary for family protection.
Note: Gratuity calculations may vary based on company policies and local regulations. Always verify with your HR department for accurate entitlement.