Eligibility for Gratuity in India
Under the Payment of Gratuity Act 1972, an employee is eligible for gratuity if they have rendered "continuous service" for at least 5 years. This applies to factories, mines, oilfields, plantations, ports, railways, and shops or establishments with 10 or more employees.
The 15/26 Calculation Formula
The standard formula used to calculate gratuity is:
Gratuity = (Last Drawn Basic SAlary + DA) x (15/26) x Number of Years of service
Authentic FAQ (search Console Data)
What is the 4 year and 240 days rule?
Courts in India have often ruled that if an employee completes 4 years and 240 days (or 190 days in certain sectors), they are entitled to gratuity as it counts as a full 5th year of "continuous service."
Is gratuity taxable in India?
For government employees, gratuity is fully exempt. For private-sector employees, it is tax-free up to ₹20 Lakhs (as per the latest amendment).
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