How much gratuity do you receive on a ₹80,000 monthly salary after 10 years of service?

The Payment of Gratuity Act 1972 entitles employees with 5+ years of service to a gratuity payout equal to 15 days of last drawn salary for each completed year. The formula is (15 × last salary × years of service) ÷ 26. On ₹80,000 last drawn basic salary after 10 years: 15 × 80,000 × 10 ÷ 26 = ₹4.62 lakh. This is tax-free up to ₹20 lakh under the Act.

Two technicalities catch people out. First, “salary” for gratuity means basic + dearness allowance — not gross CTC. So check your CTC structure: if basic is 40% of CTC (common in modern Indian payroll), your gratuity base is 40% of what you think. Second, the 5-year minimum is strict — leave at 4 years 11 months and you forfeit the entire amount.

For employees covered under the Act (companies with 10+ employees in most cases), gratuity is a statutory liability the employer must fund. Some companies pre-fund through LIC or insurance-backed gratuity trusts; others pay from operating cash on exit. If you’re in a small or financially-stressed company, follow up early after exit — gratuity dues can be delayed and EPFO has no jurisdiction over enforcement.