How to calculate graduaty

The Payment of Gratuity Act (like any other labour Act) has nothing to do with how the ownership of the establishment is formed. Therefore, there is no difference in the treatment when the establishment is set up as Proprietorship or Company form (private limited or Public limited)

Gratuity formula -> last drawn basic salary*15/26*no.of years of service.....

IF gratuity is not covered under Payment of gratuity Act

We need avg. of 10 months preceding the month of retirement 

 last drawn salary 

If not covered 

Exempt amount  is LOWER OF 

10,00,000

Gratuity received

15/30 X avg. of 10 months preceding the month of retirement  X completed year of service 

Note: Salary for this puprose means Basic + DA (IF forming part of gratuity) + Comm. (sales based)

(HRA is not included)

If covered , exempt lower of

15/26 X LAST DRAWN SALARY X Completed year of service or part of the year if in excess of 6 mnths

10,00,000

Gratuity received

Salary here means Basic + DA only