Question 1

Who is eligible for gratuity?

Accepted Answer

Any employee who has completed 5+ years of continuous service with the same employer. Applies to organizations with 10+ employees. Also payable in case of death/disability regardless of tenure.

Question 2

How is gratuity calculated?

Accepted Answer

Gratuity = (Last drawn Basic + DA) × 15 × Years of service / 26. The 15/26 factor means 15 days of salary for each completed year, with 26 working days per month.

Question 3

Is gratuity taxable?

Accepted Answer

Gratuity up to ₹20 lakh is tax-free for private sector employees (₹20L limit was increased from ₹10L in 2019). Government employees' gratuity is fully tax-free. Amount above ₹20L is taxed at your slab rate.

Question 4

Can employer refuse to pay gratuity?

Accepted Answer

No. Gratuity is a statutory right under the Payment of Gratuity Act 1972. If employer refuses, file a complaint with the Controlling Authority (Labour Commissioner). Employer can forfeit gratuity only if the employee was terminated for serious misconduct.

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