Gratuity in Salary

All Groups

Gratuity is a way to reward long service. If an employee completes five or more years with your company, they’re legally eligible for a one-time payout — calculated using a simple formula:

(15 / 26) × last drawn basic salary × years of service

This amount is exempt from tax up to a limit. While it’s part of the CTC, gratuity is only paid at the time of resignation, retirement, or termination. Most HR tools now track employee tenure and automatically calculate the eligible amount during offboarding.

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