Gratuity payout on resignation or retirement, Payment of Gratuity Act 1972
| Organisation | Formula | Divisor |
|---|---|---|
| Covered under Act (10+ employees) | Basic x 15/26 x Years | 26 working days |
| Not covered | Basic x 15/30 x Years | 30 calendar days |
| Death / Disablement | No minimum service required | , |
| Maximum tax-free | Rs 20,00,000 | Section 10(10) |
Gratuity is a statutory benefit paid to employees who have served an organisation for at least 5 years. It is governed by the Payment of Gratuity Act, 1972. On resignation, retirement, death, or disablement the employer must pay gratuity within 30 days.