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Gratuity Calculation: What will be your gratuity for Rs 40,000, Rs 60,000 and Rs 80,000 last-drawn salary after 6 years and 7 months of service?
- Written by Shriti Aniraj
Published: Zee Business| Updated: Zee Business
If you’ve completed over 6.5 years of service, you may be eligible for gratuity under the Payment of Gratuity Act, 1972. This guide explains how gratuity is calculated for last-drawn salaries of Rs 40,000, Rs 60,000, and Rs 80,000 using the official formula. Understand eligibility rules, how partial years are rounded, and the tax exemption limit of Rs 20 lakh. Gratuity is a valuable retirement benefit that strengthens your financial planning and ensures a safety net during job changes or post-employment life.
(Disclaimer: Don't consider this as an investment advice. Do your own due diligence or consult an expert for financial planning)
1/10
Gratuity Eligibility Under Indian Law
1/10Employees who complete at least 5 years of continuous service in a company with 10 or more employees are eligible for gratuity under the Payment of Gratuity Act, 1972.
2/10
When Can You Claim Gratuity?
2/10You are entitled to gratuity upon:
Retirement Resignation after 5 years of service Superannuation Death or permanent disability (no minimum service needed)3/10
How Partial Years Are Counted in Gratuity
3/10If your service exceeds 6 months, it is rounded up to the next full year. Example: 6 years and 7 months is considered 7 years for calculation purposes.
4/10
Gratuity Calculation Formula
4/10The standard formula under the Act is: Gratuity = (Last Drawn Salary × Years of Service × 15) ÷ 26
15 = 15 days’ salary
26 = Average working days in a mont
5/10
Gratuity on Rs 40,000 salary (6 Years 7 Months Service)
5/10Rounded to 7 years: (40,000 × 7 × 15) ÷ 26 = Rs 1,61,538
6/10
Gratuity on Rs 60,000 salary (6 years 7 months service)
6/10Rounded to 7 years: (60,000 × 7 × 15) ÷ 26 = Rs 2,42,308
7/10
7/108/10
Gratuity on Rs 80,000 salary (6 years 7 months service)
8/10Rounded to 7 years: (80,000 × 7 × 15) ÷ 26 = Rs 3,23,077
9/10
9/1010/10
Tax benefits on gratuity
10/10Gratuity up to Rs 20 lakh is tax-free as per current income tax rules. Any amount beyond this limit is taxable.
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