Employees who have completed 5 or more years of continuous service are eligible for gratuity. This applies to organizations with 10 or more employees.
How is gratuity calculated?▼
For employees covered under the Act: Gratuity = (15 × Last drawn salary × Years of service) / 26. Last drawn salary includes Basic + DA only.
Is gratuity taxable?▼
Gratuity up to ₹20 lakh is tax-exempt for private sector employees. For government employees, the entire gratuity is tax-exempt.
What happens if I leave before 5 years?▼
If you resign before completing 5 years of service, you are generally not eligible for gratuity. However, in case of death or disability, the 5-year rule is waived.