Statutory
Gratuity
Gratuity is a lump sum paid by the employer to an employee who leaves after five or more years of continuous service, at fifteen days' wages for every completed year.
Under the Payment of Gratuity Act, the amount is last drawn basic plus DA multiplied by 15/26 multiplied by completed years of service (six months or more rounds up). It is payable within 30 days of leaving and is tax-free up to ₹20 lakh.
Many companies provision 4.81 percent of basic every month inside CTC to fund it.
In Indian payroll
The five-year rule falls away on death or disablement, and the labour codes propose one year for fixed-term employees. Payroll should track service dates from the joining record so the eligibility question never needs a spreadsheet.
What is Gratuity?
Gratuity is a lump sum paid by the employer to an employee who leaves after five or more years of continuous service, at fifteen days' wages for every completed year.
Why does Gratuity matter in Indian payroll?
The five-year rule falls away on death or disablement, and the labour codes propose one year for fixed-term employees. Payroll should track service dates from the joining record so the eligibility question never needs a spreadsheet.
Related terms
In Kuzhu
The Payroll module in Kuzhu is where Gratuity is handled, on the same employee record as everything else.
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