Understand and apply the exact gratuity formula step by step with detailed examples for both covered and non-covered employers — completely free.
| Last drawn salary (Basic + DA) | ₹50,000 |
| Service years (rounded) | 0 years |
| Formula | ₹50,000 × 15 × 0 ÷ 26 |
| ✅ Gratuity amount | ₹0 |
| Last drawn salary | ₹50,000 |
| Service years (rounded) | 0 years |
| Formula | ₹50,000 × 15 × 0 ÷ 30 |
| ✅ Gratuity amount | ₹0 |
⚠️ Important notes:
For Act-covered employers: Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26. For non-covered employers: Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 30. Last drawn salary includes only basic salary and DA.
26 represents the number of working days in a month for Act-covered employers, assuming 4 Sundays are non-working days. It is used to calculate the daily wage rate for gratuity purposes.
For employers not covered under the Payment of Gratuity Act, 30 calendar days are used as the monthly denominator instead of 26 working days, resulting in a slightly lower gratuity amount.
If remaining months after completed years are more than 6, they are rounded up to the next full year. If 6 months or less, they are dropped. For example, 10 years 7 months becomes 11 years, while 10 years 4 months stays as 10 years.
No, HRA and other allowances like transport, special allowance, or medical allowance are not included in the gratuity formula. Only basic salary and dearness allowance (DA) are considered as the last drawn salary for gratuity calculation.