InvestorQ : What is gratuity? is there any formula to calculate gratuity?
Ira Shah made post

What is gratuity? is there any formula to calculate gratuity?

Answer
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ramya Bhaskaran answered.
1 year ago


Gratuity is the part of the salary that an employer pays to an employee, at the time of the employee leaving his/her job, for the services that the employee has put in the company. It is like a reward for employee loyalty.
How to calculate gratuity?
Count the number of tenure of service and consider the last drawn salary. Calculation of gratuity is formula-based:
Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26.
*If the tenure of service is more than 6 months, the consider it as a whole one year.

For Instance:  
Tenure of service- 15 years 
Last drawn salary with dearness allowance- Rs 30000. ,

Hence, calculated amount of gratuity = 15*30000*15/26 = Rs 2,59,615