Gratuity Calculation Formula : Step by Step Guide with Example

Mitali | Last updated: 16 March 2026

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Quick Summary

Gratuity is a statutory benefit paid to employees in India as a reward for their service, typically upon retirement or death. To be eligible, employees usually need to complete at least 5 years of continuous service, though exceptions exist for disability or death. The calculation involves the last drawn salary, years of service, and a specific formula based on whether the employer is covered by the Payment of Gratuity Act, 1972.

Gratuity is a statutory benefit paid to the employees as a token of appreciation for their service to the organization. It is typically paid at the time of retirement or upon the employee’s death or any disablement due to accident or disease. Gratuity payment usually depends on the amount of the la

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About the Author

Mitali

Finance Professional

I write about Income Tax, GST, TDS, RBI updates, government schemes, and personal finance in India. My focus is on simplifying complex tax and compliance topics into easy-to-understand guides that help readers stay updated with the latest financial rules, investment options, and regulatory changes.

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Gratuity Calculation Formula : Step by Step Guide with Example

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