Gratuity is a lump sum for long service. The formula is fixed by statute; the two details worth double-checking are the divisor and how part-years are rounded.
Payment of Gratuity Act: (Basic+DA) × 15 × Years / 26. Eligibility 5 years. Cap ₹20 lakh.
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Take the last drawn monthly Basic + DA.
Multiply by 15 — fifteen days' wages for each completed year.
Divide by 26 for employees covered by the Act, being the assumed working days in a month. Employers outside the Act commonly use 30.
Multiply by completed years of service, with any part-year above six months rounded up.
On last drawn Basic + DA of ₹50,000 with 8 years of service: 50,000 × 15 × 8 ÷ 26 = ₹2,30,769.
Normally no. The exception is death or permanent disablement, where the five-year condition does not apply.
For covered private-sector employees it is exempt up to ₹20 lakh across your working life. Anything above that is taxable.
The Act assumes 26 working days in a month, excluding weekly offs. Using 30 produces a smaller figure and is only appropriate where the Act does not apply.
Garuda HR looks after payroll, attendance, leave and statutory compliance for Indian teams — the same arithmetic, run for you every month, with a full audit trail. We would be glad to show you around.