Gratuity is a collectable amount for an employee, paid as a gratitude by the organization. An individual who has worked in an organization for a minimum period of 5 years is eligible for gratuity. It is also known as the end of service benefits. Gratuity calculation is based on his/her average salary, dearness allowance and number of years he / she worked in the organization.

Here is some simple example to learn the gratuity calculation (India), based on Basic pay , D.A and year of service.

Gratuity Amount = [ (Basic Pay + D.A) x 15 days x No. of years of service ] / 26
**Where, **
D.A = Dearness Allowance
**Note:**
End of Service Benefits Eligibility :
1. Any person employed on wages/salary.
2. At the time of retirement or resignation or on superannuation, an employee should have rendered continuous service of not less than five years.
3. Payable without completion of five years only when death and disablement.

Calculate the gratuity amount for the basic pay of Rs.25000 and D.A Rs.2000 with 10 years of service.

Gratuity calculation can be calculated using the formula :

Gratuity Calculation= [ (Basic Pay + D.A) x 15 days x No. of years of service ] / 26

Basic Pay = 25000

D.A = 2000

Year of Service = 10

Substitute the values in the formula,

Gratuity = ((25000 + 2000) * 15 * 10 ) / 26

= ( 27000 * 150 ) / 26

= 4050000/26

= 155769.230

Hence, the Gratuity amount is Rs.155769.230