Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator

The Parliament passed the Payment of Gratuity (Amendment) Bill. This will increase the limit amount to Rs.20 Lakh from the existing Rs.10 Lakh. This is applicable for central govt employees and also private sector employees (organized sectors).

Considering this new Payment of Gratuity (Amendment) Bill, let us see the new rules, eligibility, the formula to calculate, taxation and also the calculator.

Gratuity is nothing but a favorable BONUS given to you by your employer for being loyal to them as an employee for long.  Gratuity is a defined benefit plan offered by your employer.

It is a payment made to an employee by the employer either at the time of retirement or when he is leaving the job.  It is given to the employee once he has completed at least 5 years of continuous service.

It is mandatory for any employer in the private sector or public sector who has 10 or more employees to pay gratuity to all employees.

Who is eligible for Gratuity?

If your company’s employee strength is more than 10 and if you completed a minimum of 5 years of continues service, then you are eligible for Gratuity. Do remember that once employee strength reached to 10 or more, then even though the strength reduced later, you are still eligible for Gratuity.

Temporary staff, contract workers etc., are also eligible for the gratuity amount, as long as they are considered as employees of the organization. However, apprentices are not eligible for Gratuity.

If an employee is transferred overseas on an assignment, then he is still eligible for Gratuity as he is on the rolls of the company.

Probation period can be considered in determining the number of years of service.

It will be payable to you at the time of-

  • Retirement.
  • Resignation or Termination.
  • On death or Disablement due to accident or disease.
  • On Retrenchment Layoff.
  • VRS.

What is the meaning of 5 years of continues service under Gratuity?

As per the Payment of Gratuity Act 1972, a period of uninterrupted service including service which may be interrupted on account of the following-

# Sickness,

# Accident,

# Leave,

# Layoff,

# Strike,

# Lockout,

# Cessation of work not due to any fault of the employees and

# Absence from duty without leave(not being absence in respect of which an order treating the actions as break in service has been passed in accordance with d standing orders, rules or regulations governing the employees of the establishment).

How is the 5 years service calculated in Gratuity?

If an employee works below the ground (like mine), every year in which the employee works for more than 190 days in a year, is considered as 1 year. If the employee works above the ground, 240 working days in a year is taken as 1 year for gratuity calculation.

Hence, if the number of days worked in a year is less than the above-said working days, then such a year is ignored for Gratuity calculation.

For example, if an employee worked for 4 years and 8 months, the duration is considered as 5 years of continues service and he is eligible for gratuity.

However, if the employee has worked for 4 years and 4 months, it is treated as less than 5 years and no gratuity will be payable to an employee.

When are the 5 years of continued service not applicable in Gratuity?

The condition of 5 years of continuous service is not applicable if employee’s service is terminated due to DEATH OR DISABLEMENT. Your nominee or legal heir can receive your gratuity amount (in the event of the death of the employee).

What is the new limit under Gratuity (As per Payment of Gratuity (Amendment) Bill 2017)?

Earlier the maximum limit employee can receive under Gratuity was Rs.10 lakh. However, now it is enhanced to Rs.20 lakh.

However, if your employer ready to pay more than this, then they can do so. But such amount which is more than Rs.20 lakh Gratuity will be taxable income for you.

The ceiling of Rs.20 lakh applies to the aggregate of gratuity received from one or more employers in the same or different years.

Note:-The effective date of this new Gratuity limit is 29th March 2018. Refer the notification for the same.

How to calculate Gratuity Amount?

In order to calculate the Gratuity amount, first, you have to check it whether you are covered under the Gratuity Act or not. Based on that the calculation can be done.

# Calculate Gratuity Amount (covered by the Payment of Gratuity Act, 1972)

Definition of Salary for the purpose of calculation of Gratuity is Basic+DA only (Salary definition for calculation of Gratuity, HRA, EPF and Leave Encashment). You must not include any other salary components for this purpose. The formula to calculate Gratuity is as below.

Gratuity = Last drawn salary * 15/26 * No. of completed years of service.

Completed years of service-Suppose if your service is more than 6 months in a year, then such year is considered as a year for calculation. However, if it is less than 6 months, then you have to ignore that year for calculation.

For example, if your service is 6 years 4 months, then the completed years of service will be 6  years only. However, if your service is 6 years 7 months, then the completed years of service will be 7 years.

You have to ignore the weeks and days for this calculation. Also, you must be worked for more than 6 months in a year i.e 6 months one day or more.

# Calculate Gratuity Amount (Not covered by the Payment of Gratuity Act, 1972)

Definition of Salary for the purpose of calculation of Gratuity is Basic salary, Dearness Allowance (DA) and Commission (if paid as a % of turnover) (Salary definition for calculation of Gratuity, HRA, EPF and Leave Encashment). You must not include any other salary components for this purpose. The formula to calculate Gratuity is as below.

Gratuity = Average salary *  ½  * No. of years of service

Average Salary-Average of last 10 months salary (Basic + DA + Commission) preceding the month of your retirement/resignation.

No. of years of service-The completed years only considered as your service years. For example, if you completed 6 years and 8 months, then you have to consider only 6 years and exclude 8 months. Same way, if you completed 6 years and 4 months, then also you have to consider only 6 years and exclude 8 months for calculation.

Tax Benefits of Gratuity

Any gratuity amount received by an employee (Govt or Private employee) during his service is taxable.

However, when gratuity is received by the employee at the time of his retirement, death or superannuation then tax exemption rules for government employees differs from private employees. Refer the below points for the same purpose.

# Tax Benefits of Gratuity for Central and State Govt. employees, Defense employees, and employees in Local authority

Any Gratuity received by Central and State Government employees, defense employees and employes in local authority during death or retirement is completely tax-free.

# Tax Benefits of Gratuity for private sector who are covered under Payment of Gratuity Act 1972

Tax Benefits of Gratuity for private sector employees who are covered under the Payment of Gratuity Act 1972 is exempted up to the least of the following-

  • Rs 20,00,000
  • Actual Gratuity received
  • Last drawn salary*15/26*Number of years of service

# Tax Benefits of Gratuity for private sector who are NOT covered under Payment of Gratuity Act 1972

Tax Benefits of Gratuity for private sector employees who are NOT covered under the Payment of Gratuity Act 1972 is exempted up to the least of the following-

  • Rs 20,00,000
  • Actual Gratuity received
  • Average salary * (1/2*Number of years of service)

As I said above the ceiling of Rs.20 lakh applies to the aggregate of gratuity received from one or more employers in the same or different years.

Take an example that Mr.X worked in an organization ABC for 6 years and received Rs.10 lakh as Gratuity. He claimed that for tax benefits and this amount is fully tax-exempt.

After leaving the organization ABC he joined the organization XYZ. Here he worked for 11 years and received the Gratuity amount of Rs.20 lakh.

As he already availed the exemption of Rs.6 lakh from the Gratuity received from the organization ABC, this time he can avail the maximum tax exemption of another Rs.14 lakh only (Rs.20 lakh-Rs.6 lakh). The remaining Rs.6 lakh gratuity which he received from the organization XYZ will be taxable income for him.

Such income should be considered as an income under the head of SALARY. This is applicable for both Government as well as Private employees.

# Tax Benefits of Gratuity for the widow or legal heirs of employee (in case of the death of an employee)

Any gratuity received by employee’s widow or legal heirs is completely tax-free in their hands.

If the gratuity becomes due/sanctioned after the death of the employee. If the gratuity amount becomes due and paid before the death of the employee then it is taxable under the head ‘Income from Other Sources.’ The nominee / legal heir has to show it in ITR (Income Tax Returns).

When are you eligible to receive the Gratuity?

Once an employee becomes eligible to receive a gratuity, he can apply within 30 days from the date it becomes payable. However, if you are retiring from a job which is known to you earlier, then such form is to be given 30 days before such date. You have to use the Form I for this purpose.

Any Form For Claiming Gratuity Submitted After Due Dates Specified Above Can Be Accepted If Employee Give Adequate Reason For Delay.

In case of the death of an employee, the nominee can apply for gratuity in Form J within 30 days of being payable.

In case of the death of an employee, and there is no mination to gratuity, then legal heir may apply in Form H within 30 Days of being payable.

Gratuity has to be paid within 30 days from the date it is payable to the person. If it is not paid within 30 days, the company has to pay simple interest from the date of eligibility till the date of actual payment.

The nomination under the Gratuity

Once you have completed one year of service, then you have to make a nomination within 30 days from the date of completion of one year service.

If an employee has a family at the time of making a nomination, the nomination shall be made in favor of one or more members of his family, and any nomination made by such employee in favor of a person who is not a member of his family shall be void.

If at the time of making a nomination the employee has no family, the nomination may be made in favor of any person or persons but if the employee subsequently acquires a family, such nomination shall forthwith become invalid. In such a situation employee has to nominate his family member or members.

Every nomination, fresh nomination or alteration of nomination, as the case may be, shall be sent by the employee to his employer, who shall keep the same in his safe custody.

In case of death of the nominee before the death of the employee, the interest of the nominee shall revert to the employee. The employee, in such cases, shall make a fresh nomination in respect of such interest.

You can use the Form F to nominate under the Gratuity.

Online Gratuity Calculator

There are many online calculators and also the excel sheets available for you all. However, I refer the Gratuity Calculator which is available on Income Tax Department website. Refer the below link for the same.

ONLINE Gratuity Calculator

Forfeiture of gratuity

If an employee’s services are terminated due to any act, willful omission or negligence causing damage or loss to or destruction of property of the employer, the employee’s gratuity shall be forfeited to the extent of damage or loss.

The full amount of gratuity can be forfeited if an employee’s services have been terminated due to:
a) His riotous or disorderly conduct or any other violent act;
b) Committing an offense involving moral turpitude.

No court decree or court order can attach the amount payable under the Gratuity Act. This means that your gratuity will be still payable to you even if your employer goes bankrupt. No court order can stay this.

List of forms used for Gratuity

Form I-Application for the payment of Gratuity

Form J-Application for the payment of Gratuity by NOMINEE

Form K-Application for the payment of Gratuity by LEGAL HEIRS.

Form F-Nomination Form

Form G-To make a fresh nomination

Form H-Modification of the nominee

Form L-Issued by the employer to the employee stating amount and date of payment.

Form M-Issued by employer stating reasons for rejection.

Hope this much information is sufficient to understand the “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator”. Let me know if you have any doubts.

262 Comments

  1. Sir
    I have joined as a central gov employee in 2014.I am eager to resignation from my service after completion of 10 to 12 yrs.Then am I eligible for gratuity benefits.Plz sir inform me.

    Reply
  2. Sir,I was worked with a company as a contract employee for 5 years with 1 year contract extension every year for continous 5 year.is i m elliginle as per law.

    Reply
  3. Hi Basavaraj,

    Thanks for your article and all the answered queries, they were really very helpful. After going through all of them and few other articles I just had one question , I was on Indian payroll for 3.2 years and then moved overseas on Australian payroll completely from the same company, but Australian entity.

    Then after 2 years of Australian payroll, I was again moved to Indian payroll for couple of years, so technically I have completed 5 years on Indian payroll, but in parts.

    I read somewhere that the period has to be continuous 5 years, in my case can the employer deny to pay me gratuity ? Is that something I can challenge ?

    Or this tenure in parts is considered since the employer is same irrespective of the location ?

    Reply
    • Dear Aditya,
      It should be continued for 5 years. It depends on how your employer treat your Australian employment.

      Reply
  4. Sir,

    I am a 74 year old person was working for my company since last 7 years but due to the present crisis,I recently resigned from my company but unable to finalize my settlement and charge handover due to lockdown.I was under contractual service since last 7 years so my question to you is whether I would be eligible for payment of gratuity by my company owing to my services under contract as well as my age.

    Request your views on the same.

    Thank you.

    Reply
  5. Hi Sir,

    Greetings

    Sir pls help me and inform since my company had been fired me due to covid 19.I have joined organization on 26 Oct 2015 and as per company notice my last working day was 3rd May 2020 .Am I eligible for graduity since company fired me in this crisis.Please help me Sir.

    Reply
      • Sir pls help me and inform since my company had been fired me due to covid 19.I have joined organization on 1 Dec 2015 and as per company notice my last working day was 21st June 2020 .Am I eligible for graduity since company fired me in this crisis.Please help me Sir.

        Reply
  6. Dear sir ,
    I joined a company on 3rd of November 2014.
    My last working day with them was 10th Feb 2020.
    They are supposed to give me gratuity but keep on telling me that they have to receive the cheque from some govt authority!
    Is this correct or are they delaying the procedure?.

    Reply
      • Hi Sir.
        Just saw the Comment Below!! thanks.
        I got in touch with them and asked why the delay! they have mentioned that They need a go-ahead from the LIc office.
        Is there a procedure that has to be followed for gratuity by the Organisation?
        If so then i am guessing it might get delayed due to the Covid-19 situation!!!

        Reply
          • Dear Sir,
            Have been waiting as per your advice,
            There is a small questions though.

            In My CTC my per month Basic Salary is approx 80K

            However My last month with them i only worked for 10 Days and the last drawn salary was only for 10 days. and the Basic in that is low due to this

            Is the gratuity calculated as per my Monthly Basic Or As per my Last drawn Salary of 10 Days?

            I am confused as some places mention the Gratuity be calculated as per last drawn Salary!!

            Please clarify!

            Reply
  7. Sir ,
    My date of joining on 3/8/2015 and my company is finalizing / closing my account on 31/03/2020 .
    kindly calculate whether I am eligible for gratuity or not.

    Thanks
    Gyanaranjan Patel

    Reply
    • Dear Gyanaranjan,
      You don’t know how to calculate the total days?

      Reply
      • I know sir.
        according to me .. starting from 3/8/2015 to 2/8/2019 ..it completes 4 year.
        then from 3/8/2019 to 31/3/2020 it is 242 days.
        but when they are calculating for 5th year.. they are taking 26 working days in a month. In this way my working days are lesser.

        Thats why I requested you to calculate.

        I am confused .

        Thanks.

        Reply
            • Then sir, why have you given an example that 4 years and 8 months is eligible for gratuity ??

              Reply
  8. sir

    i was working in a pharmaceutical company ,i have worked there near about 3 years 5 month. then due to low back problem i was on medical leave .then after two month company discharge my employment . Now i want to know that am i eligible for gratuity or not .if yes then against which rule i can claim
    company not giving my two monh salary also ( i have submit my all medicals on time )

    Reply
    • Dear Adesh,
      If you not completed 5 years, then how you are eligible?

      Reply
  9. Sir,

    We are Pvt limited company and proposing to retrench one division . The employees are ranging from 1 year experience to 12 years. When we now coming up with a proposal to close down that division we are supposed to pay gratuity to all of them ignoring 5 year period? Is our understanding is right?
    Thank you Sir.

    Reply
    • Dear Kalyan,
      If the employees completed 5 years, then you have to pay them a gratuity.

      Reply
  10. Dear Sir,
    Greetings!

    If employee get gratuity amount at the time of leaving organisation after completion of 4 years and 7 months (continuous service) can exemption be provided.

    Regards
    Rangaswamy

    Reply
  11. Hi,

    I have completed 5 years of my service in dec 2019, and i have resigned.

    During my 5 years of service with my employer, 4.5 years i was working abroad. Am i eligible for gratuity?

    My company told me that since you were not on indian payroll, you are not eligible.

    Please help me on this.

    Reply
    • Dear Mayank,
      If payroll is not from India, then yes you are not eligible.

      Reply
  12. Hi Sir,
    I have worked for a mnc for 4 years 225days . If we calculate as calendar year it comes 4 years 7 months and 7 days. In policy it says we need. Complete 240 days in 5 th year .

    My joining date if 20-July-2015 and Resigned Date is 27-FEB-2020. Can i have the ability to get the gratuity?

    Reply
    • Dear Sarath,
      If the policy you received from employer claim 240 days then how you are eligible?

      Reply
  13. Hi Sir,

    My joining date if 20-July-2015 and Resigned Date is 27-FEB-2020. Can i have the ability to get the gratuity?

    Reply
  14. Sir,
    I resigned from my service in June 2019(private sector) since I got government job.but I didn’t apply for the gratuity yet..can I am eligible to apply for gratuity now..please reply sir

    Reply
  15. Hello Sir ,

    I am in private MNC .If have completed 4 years 6 months . Am I eligible to get get gratuity.

    Reply
  16. Dear Basu Sir,

    My question is if I leave company after 4 years and 240 days of service. Should the 240 days be working days or calender days in order to get the gratuity?

    Reply
  17. Dear Sir,

    I Joined Company A on 15.10.2015, after one half month , i.e 01.12.2015 A company transferred me to its one of his Venture Company called B.

    So, my gratuity will be considered from date of joining to A company or it will be from company B.

    Reply
  18. Hi Sir,
    My joining date if 27-July-2015 and Resigned Date is 15-Jan-2020. Can i have the ability to get the gratuity?

    Reply
  19. Dear sir what happened if i don’t serve notice period but I have 45 paid leave I can redeem 30 days in that so I will get my gratuity please tell me sir

    Reply
    • Dear Sanjay,
      Notice period is for your employer but not for Gratuity rules.

      Reply
  20. Hi Sir,
    My joining date if 18-May-2015 and Resigned Date is 27-Dec-2019. Can i have the ability to get the gratuity?

    Reply
      • Hi Sir,
        Thanks for the reply. But as per your writing i can see that in 5th year i need to complete 240 days. But in my calculation i completed 7 Months and 15 Days. That’s why i had the doubt. Can you please tell me is this correct?

        Reply
        • Dear Jithin,
          You completed 4 years and more than 6 months and thats why I said.

          Reply
          • Hi Sir,
            Yes you are right. But it will not reach 240 Days as you said. It will be around 230 Days. So can you tell me why you said i will get the Gratuity? Thanks again for your valuable replies.

            Reply
          • HI, Basavaraj,

            Please provide notification for eligible Gratuity from 4 Year 7 month.

            Reply
            • Dear Ajit,
              Refer above post properly or search in Google for notification.

              Reply
    • Hello Sir,

      I will be completing 9 years and 6 months and 3 Days on 30-May-2020 which is my last day of service.
      I work in a private IT Company.
      How many years of Gratuity I am eligible for.
      From the threads here, I guess I am eligible for complete 10 Years since my service is more than 9 years & 6 Months.
      Please clarify

      Reply
  21. Dear Sir

    I have gone through your suggestions and solutions and found extremely beneficial to employees. My case is bit different and need your guidance.I have worked in a organisation for 10 years and got the Gratuity payment orders through labour court. But the organisation asked me to rejoin after three years of break in service on the conditions that I withdraw the case and not receiving the gratuity. Under certain pressure I rejoined my services in same organisation.
    In case I am asked to leave the job , am I eligible for my previous gratuity. and how to reopen the case.

    Reply
    • Dear Kuldeep,
      Only your lawyer can guide you. I am not sure why you changed the decision earlier and now again.

      Reply
  22. Hi ….Sir What is Exact Cut off Total Amount in Gratuity.

    Reply
  23. Hi Basu,

    I joined company A in Oct 13 and left June 17 and Owner transferred me to there another company B which is listed at same location for 7 months. Later again rejoined to B company in Feb 18 and I willing to left on feb 20.

    – My responsibilities wasn’t changed
    – My location not changed
    – Owner are same

    Still I eligible for Gratuity?

    Reply
  24. SIR I TOOK UP SECOND JOB AND COMPLETED 5 YEARS OF CONTINUOUS SERVICE WITH 2ND COMPANY AND LEFT AFTER COMPLETING FIVE YRS AND 28 DAYS.BUT MY EMPLOYER SAYS I AM NOT ENTITLED TO GRATUITY SINCE I TOOK UP THE JOB AFTER SUPERANNUATION.WHOM SHOULD I APPROACH IF I AM ELIGIBLE FOR GRATUITY

    Reply
    • Dear Subash,
      Whether they are providing you superannuation facility?

      Reply
  25. Hello Sir Is there any time period require before leaving a job for drawing gratuity, if any then how many days before we should inform our company for leaving job

    Reply
    • Dear Rajiv,
      Gratuity will be payable to you only when you resign. You wish to postpone this?

      Reply
      • Sir,
        I am working in manufacturing unit from dated 8 june 15,i resigned from my job on 6th march 2020,my last working date in campany is 12 feb 2020 due to some personal problem i take the leave from 13 feb 2020,but in feb month i got full salary,sir,as per campany my last working date is 29 feb 2020 & exit date is 6 march 2020,in completing fifth year ,i got full salary in every month(no deduction),as per company last working date i am completing 4 years 8 month & 22 days,am i eligible for gratuity?,please suggest.

        Reply
        • Dear Sudheer,
          You have to calculate based on your last working date.

          Reply
  26. Hi nivesh,
    Regarding Gratuity, is continuous service is compulsory?
    For Eg: If i resign from a company after 4 years 4 months and take some break say 6 months and join the same company, then will previous service is also taken into consideration or they will consider only from new joining date for 5 years service period.

    Reply
    • Dear Rajesh,
      Resigning from the job and rejoining is not a continues service.

      Reply
  27. Wrt last msg..
    Please correct Last working day: 1-Jan-20

    Reply
  28. Hi chief..
    Very nicely explained.. Just a query on resignation date vs last working day
    E.g. Joining date: 20-April-15
    Resignation date: 1-Oct-19
    Last working day: 1-Jan-19
    Hence at the time of resignation 240 days of 5the year were not complete, but on last day of working (post serving notice period) 4yr 240+ days are completed.
    ¶ 2 LWP in between
    ¶ gratuity part of CTC and mentioned in letter
    Can there be any reason as per law company can deny Gratuity payment

    Reply
    • Dear Stuti,
      It is your last working day that matters than your resignation date.

      Reply
  29. Sir i working addecco this company contact khatam ho gaya
    is company me mene 3 year 2months job kari
    Kya me gratuity le sakta hu

    Reply
    • Dear Ajay,
      Read the service eligibility from above post once again.

      Reply
  30. Hi, Sir
    I was working with a trust Hospital where they are making profit of approx 4cr, with 160+ staff, their admin claims we don’t come under gratuity act, and never paid same to any employee. Is it fair and under law. Plz suggest what can be done.

    Reply
      • Thank you Sir, we have filed a case in labour court, I have got confidence by your reply.

        Reply
  31. Dear sir

    Please tell that if a employee wrkng for a company from past 6years and in this duration its pf not deducted bt after 6 years company tell that employee that if you wnt to deduct pf then u have to resign and will rejoin you after 10 days then his gratuy will be continue from last 6 year or from fresh joining… Is their any harm in this…

    Reply
    • Dear Aashish,
      It is from fresh joining. However, by not including you under EPF, then breach the Govt rule and also misguiding you for their fault. Becare from such employers.

      Reply
  32. CRPF 7yers Sarvesh ki ha to mujha gajyuty milage

    Reply
  33. Hi,

    I am working with reputed brand.
    I have completed 4 yrs and 10 months in the company. As per your post I am eligible for gratuity and I can claim the same.
    But my company denied to claim for gratuity as I must complete 5 yrs in company.
    Joining Date: 03.09.14
    Reliving Date: 22.07.19
    PL. Guide with what evidence I can claim for gratuity to my company.

    Regards,
    Dhaval Kapadia

    Reply
      • Dear Sir i worked in a company for 4 year 7 month .
        Join in 1 july 2015 and after resign last working day was 31st dec 2019.
        Please tell me , am i eligible to get Gratuity..?

        Reply
  34. I have been working in the organisation since nov’10 and went on my maternity in nov’18, after which i have taken 3months leave without pay…i have received salary for 8 years 6 months and 1 day, how would my gratutity be calculated if i did not join back after extented leave without pay? Please help.

    Reply
  35. Sir,Could you please tell me whether Saturday and sunday is included while calculating the days of working for the 5th year.
    I have completed 4years 8months and 14days
    Joining: 18sep 2014
    Exit: 31st May 2019
    Organisation have calculated as I have worked for 183 days (they have excluded Saturday and Sunday for the calculation)
    I work in an IT company which works 5days a week.
    Please let me know am I eligible for gratuity

    Reply
    • Dear Pavan,
      I have already explained the rules. Please read above.

      Reply
  36. Hi sir,

    My joining date at the current job is 15th Dec 2014 and last working day Aug 26 2019. I ve completed 4yrs 8 months and 12days in the company. will i eligible to receive gratuity.
    Thanks in advance

    Reply
  37. Sir.thank u so much…to an extent I am clear.. But still not very clear on a difference between break from work n leave without pay…my break was due to my child..n inspire of 3 months maternity leave ..I didn’t wanted to join my scho so principal has asked me to come back after an year to which I could manage after an year also..n I joined back after 2 years break only because she requested me to come…its not clear to me whether this is break or leave without pay..where should I count on…I haven’t resigned in this break period..my school is not counting it in gratuity period..but I am very confused what should I do…in court I had gone against them..but waiting for a date..sorry for the trouble I am giving u again..but if possible pl.clarify my doubt about break n leave without pay difference..

    Reply
    • Dear Priyanka,
      Your maternity leave is beyond the limit. Hence, your school is correct in considering this break for service period calculation.

      Reply
  38. So sir according to counting leave without pay I should take total 14 years for gratuity… Including my two leave without pay breaks…my school is not paying since last 2 years n I had applied in labour court..they tried to settle for some amount which was very less..I didn’t accept n now I have to file a case against it..then knowing this they increased some few thousand..n still its not the amount I expected…not sure will I win the case if I include my break in count of service..pl.suggest the best possible way..thanks in advance

    Reply
  39. Also all the years I was getting a salary which was along with PF deductions n etc..but only in my last working year when I joined back after my second break I was given consolidated salery..without any deductions..will gratuity be calculated on this salary of my last year..or when I took break in 2014 till 2016

    Reply
  40. Hi sir,

    My joining date at the current job is 3rd nov 2014 and as on today ie 22nd jun 2019 I ve completed 4yrs 7months and 19days in the company. On a casual chat with my colleagues I heard about this amendment from madras high court that you ll be eligible for gratuity after 4yrs 8months and 22days. Is the same true if no what’s the latest date I ll be eligible to receive gratuity. Btw I work for a private organisation in Bangalore. Also on 25th July 2019 I’ll be completing a period of 4yrs 8months and 22 days in the organisation.
    Thanks in advance

    Regards,
    Karthik

    Reply
  41. Sir I had worked in a school for total 14 years in which I took maternity break of 3months extended to 2 years.. In these two Years I didn’t resign from job n joined back there itself ..I was on leave without pay…I did this two times…n the school called me back again after my second break of two years.. I again joined back there.will this be counted for my gratuity period..I took my first break after 5 continuous years n then 2 years break n worked for 4 years continuously n then 2 years break n worked for one more year..total is 14 years.. Or I should not count my break…I didn’t resign both the times..I resigned only in 2017..

    Reply
      • OK sir..thank u..but I had a doubt regarding leave without pay..if u r a employee of same school n not resigned ..then won’t it be counted in ur gratuity time period..I was told by someone that it WL be counted as I had not resigned n didn’t work anywhere else ..joined the same school after my maternity break..pl.clarify this point

        Reply
        • Dear Priyanka,
          Leave without pay also form the part of gratuity service period eligibility.

          Reply
  42. Dear Basavaraj, thanks for this wonderful article. I have a strange question though. I am an employee of HCL Technologies. I was in HCL India for 2.5 years and was transferred to HCL Australia (its been more than 2.5 years in Australia as of now). My monthly pay check comes from HCL Australia since I moved to Australia. But they still credit my PF in India. Can you please let me know on whether I am eligible for a gratuity considering that the pay rolls have been HCL India and HCL Australia? I did read your line that said “If an employee is transferred overseas on an assignment, then he is still eligible for Gratuity as he is on the rolls of the company.”… But I am assuming this means pay roll of the same company while in my case will the consider HCL India and HCL Australia as two different entities.

    Reply
    • Dear Raj,
      You have a valid reason to show that they are contributing to your EPF now also. Hence, as per my knowledge, you are eligible for Gratuity.

      Reply
  43. Dear Basavaraj.,
    I worked in Lnt technology services from July 16th 2014 to 31st May 2019. That means I completely worked for 4 years 10 months. HR told me that I am not eligible for Gratuity. But as per your article I must get my Gratuity. So how I can proceed to claim the Gratuity from the company?

    Reply
      • Hi Basavaraj,
        Will the rules change from company to company?
        I asked our separation desk through mail. They just replied saying I am not eligible. They didn’t provide any policy reference.

        Thank you

        Reply
        • Dear PK,
          Rules are same across India. That is the reason I asked that let them come up with THEIR RULE and show the same with you.

          Reply
  44. Sir,I had completed 7years of service in a private hospital as nurse and I given 24hour resignation.let me know that I am eligible for gratuity…..

    Reply
  45. Hi,

    I had completed 4 years 6 months and 19 days of service in IT sector company.

    Can you please let me know that am I eligible for Gratuity?

    Reply
  46. Hi Sir,
    I have been working in an organisation from 25 July 2014 and my last working day is 30 June 2019. Am i eligible for Gratuity.
    “5 working days a week”. Please reply.

    Reply
    • Dear Madhu,
      Please refer the post properly where I have mentioned the number of days to be considered if your working days are 5.

      Reply
  47. Hi plz tell april 2014 to oct 2018 complete the eligibility for gratuity or not ? As per year is not bt as per day of working 240 days in a year it completes

    Reply
      • Sir 6 days

        Reply
        • Dear Anshika,
          In that case you have to complete 4 years and 240 days of service.

          Reply
  48. Dear sir
    I have joined company 23/9/2014
    And last day of my notice period 3/6/2019
    I am eligible for graduaity

    Reply
    • Dear Harish,
      Similar question was asked many times. Please refer the above post.

      Reply
  49. Dear sir i am working HDFCBANK JOINING DATE IS 19-05-2014 AND LAST WORKING DAY IS 21-05-2019 INCLUDING 1 MONTH NOTIC TIME I AM ELIGIBLE GRAGURITY?

    Reply
  50. Sir I worked in a state govt psu on their direct contract for 7 years 5 months. But during the service after 4 years and 3 months the corporation brings one day break in the service. I am eligible for gratuity. the compulsory break in contract is legally right??

    Reply
    • Thanks you sir.. How can I defend their arguments in labour court?

      Reply
  51. Sir good evening…
    My name is Ranjit Debnath from Bangalore City.
    Sir I am working ITC Limited company from 19 may 2014 till the date..
    Can I am eligible for gratuity plz tell?

    Reply
  52. Hi,

    I have joined on 18-08-2014 and leaving the organisation on 14-05-2019.
    do i have the eligibility in Gratuity??

    In my above message i have entered wrong year. Apologies for that

    Reply
    • Dear Sri,
      Are you finding it difficult to calculate the NUMBER OF DAYS?

      Reply
      • Dear Basavaraj,

        No, I have total 4 years and 269 days by this May-14 2019. Am I been eligible for this gratuity?

        Reply
  53. Dear sir,
    im working in a company from past 4 year 6 month. shall i eligible for gratuity?

    Reply
    • Dear Lakshmeesh,
      Refer the above post properly for the number of days to be completed.

      Reply
      • Sir good after noon, My joning date is 25 /04/20015 to 20/09/2019 sir now my company is lock out shall i eligible for gratutiy

        Reply
  54. Hi, my service is of 4 yrs and 7 months . Including 2 months notice period…is notice period also taken into consideration? And I’m I eligible?

    Reply
  55. Hi Sir,

    I am working in a company with 5 days working in a week.
    I have completed 4 years 205 days in company.
    Would I be eligible for gratuity.
    Please share any rule reference to claim in company

    Reply
  56. Hi Sir,

    I am working in a company where 5 days working in a week applicable.
    I have completed 4 years and 205 days.
    Whether I am eligible to get gratuity.
    Please share if any reference.

    Reply
  57. Hai sir
    Service from date 18-11-2013 to 20-07-2018
    I’m eligible for gratuity?
    My HR say not eligible

    Reply
    • Dear Rajendran,
      Why not calculate the days on your own rather than depending on your HR or ME?

      Reply
  58. date of joing-10/01/2014…privateBank

    last date of office including 1 months notice period – 31/12/2018

    i.e including notice period I had worked for 4 yrs 11 months….weather I m eligible for graduity.

    Reply
    • Sir gd morning, some confusion are there .
      4 yr and 190 day or 240 day are calculate 5 day a week. And I was woke with Pvt bank(6 day a week)can i eligible for gratuity.

      Reply
  59. Hi. This is shruthi. I have worked in an organisation form 1st April 2014 till 27th November 2018. I.e 4years 7months 27 months. But they told i am not eligible for gratuity. Can i register a case? What is the procedure?

    Reply
    • Dear Shruthi,
      As per rule, you are eligible. Yes, you can do what you want to do legally.

      Reply
  60. More informative….thanks Mr Basavaraj tonagatti…..

    Reply
      • Sir,
        I left cpsu after continuous service of 18 years and 11 months and joined central govt service on very next day. My previous employer is saying that need to route your application through present employer stating that gratuity can not be transferred to central govt from cpsu and hence can be paid. Is it correct. I already completed 3 months of service in central govt.

        Reply
      • Sir I opted my basic from 30% of my CTC to 50% of CTC in 10th year of my service. I continued last 4 months with 50% basic with an exception that I will get more gratuity and PF. But after I left job, my gratuity was calculated with old slab 30%. Employer says since I opted basic from 30 to 50% and hence I will not get the benefit of last 4 month’s basic. Is that correct. My gratuity should be calculated on last 4 month’s basic, which was 50% of CTC or 30% basic? Please let me know? Need your help and guidance.

        Reply
        • Dear Sanjit,
          By mere opting for higher basic with intention of higher gratuity is not eligible. Your employer is right.

          Reply
  61. Hello Sir,

    I worked for a company and resigned after 1 and half year of my service. Just need to know if I am eligible to claim gratuity. Thanks in advance

    Reply
  62. I am completed my 4 year 6 month of service can i eligible for gratuity.

    Reply
    • Dear Abhay,
      Whether 6 months exactly completed or more than that?

      Reply
  63. I have 4 years 7 months experience, will be eligible for gratituty ?

    Reply
  64. Thanks sir for giving better information about gratuity & tell me once again, continuous service means if the person worked 3 years with the criteria of 240 days and 4th year he is not met the criteria and again 5th & 6th year he completed 240 days criteria. Whether he is eligible for gratuity or not.

    Reply
    • Dear Yogish,
      Only if the employer consider such service as CONTINUES service.

      Reply
  65. Hi Sir, I have joined a company on 5th March 2014 with a probation period of 6 months and left the organisation on 28th Dec-2018 (4 years 9 months 23 days). Would I be eligible for gratuity?? Please advise.

    Regards

    Reply
  66. Please provide link for official notification.

    Reply
  67. Hello Sir,
    I had joined software company on 20 Jan 2014 and my last working day is 18-Oct-2018 total no. of days 4 yrs 8 months 28 days. We have only 5 days working in a week. Will I be eligible for gratuity? My company account team says, you are not eligible for gratuity. 5 yrs is mandatory to serve in company.

    Reply
    • Dear Dheeran,
      Refer my above post once again. I have written this based on the rules. If possible let him show his believed rules.

      Reply
  68. Hi

    Thank you for giving the valuebale information

    Just need to have a clarification i completed 4 year 6 month from the date of joining & i am going to do a notice period of 2 months am i eligible for the gratuity amount .if yes then need to know on which act of government & is it applicable for every organisation

    Thank you

    Reply
    • Dear Nimse,
      Whether the two months are part of 4 years 6 months or what?

      Reply
  69. Hi, Thank you for this information, my current company is takeover by another company, in that case can we get the gratuity from older organization? Or it would transfer to new company?

    Reply
  70. Dear Basav Ji,

    I have worked in my organisation from 4th Nov,2013 till 30th Aug,2018.

    Please inform if Iam eligible for gratuity going by 240 days rule for 5th year. Also if you could substantiate with the relevant mention in the act.

    Reply
    • Dear Sweety,
      I already mentioned the rules about the number of working days. Please go through the post once again.

      Reply
  71. Dear Basavraj ji
    It is very useful information . One clarification I would like to get , you have written that tax benefit to the extent of Rs 20,00,000 is available to even those establishments which are not covered under Payment of Gratuity Act 1972 . In that case I think it is covered under section 10(10)(iii), where no such tax benefit is clarified. Separate notification is issued under that section.
    Pl clarify whether tax exemption is applicable in such cases also without any notification.

    Shubh Jain

    Reply
    • Dear Jain,
      Yes, even though there is no separate notification in this regard, you can consider the way I explained above.

      Reply
  72. Dear Sir

    It is so clear and easy to understand, thank you for this useful information.

    Thank you
    Chandan TG

    Reply
  73. Hi

    Good Evening

    I am working with a private organization which follows 5 day working. My date of joining is 1st Oct 2013, can u tell me what should be my last working day so that i am eligible for gratuity.

    Thanks in advance

    Gopi

    Reply
    • Dear Gopinath,
      Whether you have 5 working days or 4 working days, the weekly off does not discarded for calculation. Hence, you just follow the rules which I already explained in above post.

      Reply
  74. Is gratuity mandatory for an employee. I am working as a contract employee and my employer is deducting amount every month saying its mandatory norms.

    Reply
  75. Can there be an explicit contract with staff which exempts the company for payment of gratuity.

    If a company is loss making then is it compulsory?

    Can the Gratuity be paid 8n Cash by the Director from his personal capacity?

    Reply
    • Dear Kaushal,
      If there are more than 10 employees, then employer has to provide the Gratuity. Loss or profit of the company does not matter here. There is no such rule (as per me) regarding how the gratuity can be payable (in cash, through cheque or bank transfer)

      Reply
  76. If i have retired in July 2017 , will the amended gratuity amount of 20Lakhs be applicable ?

    Reply
    • Dear Visvesh,
      Please refer to the above post properly. The effective date of the same is 29th March 2018.

      Reply
  77. HI Basavraj,
    Thanks for sharing such a nice information which was not known to many of us.
    I have joined organization on 1st Oct.2013 and date of leaving would be 3rd Jul.2018, in this case would you think i am still eligible for Gratuity ?
    Kindly advice.

    Thanks.

    Reply
  78. Nice informaion, Basavaraj!

    Reply
  79. date of joing-07/11/2013 …private MNC

    last date of office including 2 months notice period-25/07/2018

    i.e including notice period I had worked for 4 yrs 8 months….weather I m eligible for graduity.

    Reply
    • Yes you’re eligible. Make sure even your company knows about it.

      Reply
  80. hi,

    I joined my current company on Feb 10 2014, which means i have completed 4 year 3 months now. How much more time including my two months notice period should i spent in this company to be eligible for gratuity. Keeping in mind all comments above, i need to spend 5 more months more atleast or anything lesser may work. ?

    Regards.

    Reply
    • Give your notice after working for 3 months.

      Reply
    • Dear Vishal,
      I already mentioned that 240 working days is considered as a year. In the shared link, it is mentioned that 4 years 240 days completed employees are also eligible for Gratuity. Hence, there is no change in what I have written with respect to the court judgment.

      Reply
  81. Dear Sir

    i joined a MNC company on June 12th 2013, and my last working day is 15th may 2018,

    do i am eligible for gratuity , Please advice

    Reply
  82. the formula does not depict the amount 2000000, why so

    Reply
    • Dear Yousuf,
      Maybe it is not yet updated as per new guidelines.

      Reply
  83. I have worked in a Telecom ( bpo) company for 4 years 11 months 18 day from 28 March 2013 to 17 March 2018. I have resigned properly with notice period. But company has not given me gratuity. When I complained to them , they told me that you’re not eligible since you have not completed five year. Now please you tell me ,I am eligible or not. If eligible then what I can do further.

    Reply
    • Your eligible since you’ve completed 4 yr 8 months.

      Reply
    • Amit-You are eligible and better to make sure your employer about rules.

      Reply
      • If they refuse to give gratuity than what we do, go court or other

        Reply
        • Dear Navdeep,
          In that case, complaining with Labour Department or use the legal options.

          Reply
      • Dear sir I am working in MES(military engineering services ) as a junior engineer (civilian central government employ) my joining dt is 26 Dec 2014 , Now at present I am selected for the post of assistant engineer by UPPSC I have already obtain the NOC through proper channel and also given the 03 months notice period,Now I am planning to give resignation from my current job at the end of Oct 2019,let’s consider my resignation dt is 31 October 2019 ,Can I getget grauity from my department ,However during my total service period of 4 year 10 months there was 28 days of EOL( pay without leave) this leave was happen due to non sufficient balnce leave, I have only 30 days balence leave at that time and I rejoind the my duty after 58 days

        Reply
  84. Gratuity =last drawn salary (basic + da) ×15/26×no. Of service years ,is correct by emenment 2018 ?,

    Reply
    • Niklesh-YES. Amendment 2018 just increased the limit but no change in calculation formula or procedure.

      Reply
    • Mocha-We must not trust until and unless such MAYs or MIGHT turn to reality. Just avoid such junk.

      Reply
      • Though it’s plausible. Since election year is in forefront.

        Reply
  85. Sir,
    Request you to confirm, if the new gratuity rules has been notified by the Income Tax department. My CA is insisting that he will accept only after Income Tax department notification. Pl help sir.

    Reply
    • Mohan-I shared the Government notification in this regard and also the effective date of this new change. Show this to your CA.

      Reply
  86. As per gratuity act, the organisation which works for less than 6 days a week then 190 working days is considered as continuous one year. (Mentioned in the same paragraph where below the ground / mine criteria is mentioned).
    My question is working days means including weekly off, paid holiday and leaves or only working days i.e. Monday to Friday?

    Reply
      • Dear Basu,

        Thanks for the reply.

        Madras High court judgement for 240 days to be considered as one year is including leaves, weekly off, paid holidays too.

        Please, give your comment.

        Reply
  87. Dear Sir,

    Just one question. If an employee leaves the company after 4 years and 8 months…will he be eligible for a gratuity for 5 years…I read a judgement of Chennai High court which says that if an eployee has not completed 5 years but completed 4 years and 8 months still he will be eligible for the 5 years gratutity

    Reply
    • Super-Instead of commenting, please read the above post once again properly.

      Reply
  88. How do i refer to that?

    Can you provide me the details of the categories.

    Reply
    • Madhav-First check with your employer that what type of Gratuity they are providing and then refer above post.

      Reply
  89. Do you know how the Gratuity is Calculated for LIC Agent who has worked as LIC Agent for 15 years continuously and completed the age of 60 years. If you explain it in details I will be grateful to you. (How much policies considered per year for eligible to Gratuity Calculation, how much commission is considered per year for Gratuity Calculation).

    Reply
    • Dilip-Sorry I am not aware of their rules. Please be in touch with LIC. Because they have different rules to consider as LIC and Agents relation is not like employer and employee.

      Reply
  90. What about the people who leave job between 4 years and 4 months and 4 years 8 months?

    Is there any rule for 4 yr 6 months of work if the work is 5 days a week?

    Reply
    • Also, when will it be applicable from? And offical notification of any sorts?

      Additionally what was 7th Pay Commission 20L all about?

      Reply
      • Madhav-As of now, there is no such notification. Let us wait for Gazette Notification of the same.

        Reply
    • Madhav-Refer the years of service consideration for each category (who comes under Gratuity act and who not). Without knowing those details, it is hard for me to guide blindly.

      Reply
    • Have completed 4 years 11 months and 22 days of continuous service.

      Am I eligible for gratuity?

      Reply
  91. I worked for 4 years and 8 months(which includes 32 weekly off i.e. sunday) in a private org.which is covered under payment of gratuity act will i be eligible for payment of gratuity or not

    Thanks

    Mangilal Jain

    Reply
      • Dear sir
        I was on probation period for 1 year and after that gratuity was deducted .I have completed 4 years 7 month in company ..Am I eligible for gratuity

        Reply
  92. Hi – thanks for the very informative article. I joined a indian mnc in 2008, now in UK from 2009 onwards in the same company but not getting any salary in india.

    – If i leave the company in uk, will i be eligible for gratuity and will that be based on my last salary received in india or uk?
    – If i go back to india and then leave the company, will my total service length be calculated only for time spent in india or total?

    Reply
    • Vin-Whether your current role is considered as OVERSEAS ASSIGNMENT from Indian branch? Cross check with your HR. If so, then you are eligible for gratuity.

      Reply
    • Dear Sir,
      I am working a private limited company since 10 years, but my employer told me that company is not eligible for gratuity. Please help to tell reason.

      Reply
  93. Dear Sir,

    Very well explained. Sir, are State Govt employees and State Govt Autonomous bodies like Govt Medical Colleges, are the employees of these eligible for Gratuity?

    Regards,

    Reply
      • As I understand the total amount of Gratuity that can be received from different employers is capped at Rs. 20 lakhs only. Could you provide some laid down rules or circulars in this regard? we shall be obliged. Thanks

        Reply
        • Dear Sat,
          The combined limit is the old rule, which you can find it in Govt notifications. Currently, they just enhanced the limit.

          Reply
        • dear sir i have joined on 14/4/2015 and i want to resign my job by 15/3/2020 can i get gratuity…

          Reply
            • Hi sir,

              My company had been fired me because covid-19. I have completed 2 years 5 months in current organisation. Am I eligible for gratuity?

              Reply
          • Hi Sir, I joined on 10th June 2015 and my last working day is 20th March 2020 with same employer, I am eligible for Gratuity.

            Reply
              • Dear sir.
                I joined a company on 3rd of November 2014.
                In 2016 the company wast acquired by another and we continued in the same role.
                My last working day was on 10th of feb 2020!!
                The company has already mentioned that they will give gratuity. But they have mentioned that they need to wait for a cheque from the govt!.
                Is this correct?.

                Reply
                • Dear Kunwar,
                  They are misguiding you. Govt will not DONATE Gratuaity but it is from your employer.

                  Reply

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