Gratuity Calculation For 7 Years: Know What You’ll Get On ₹28K, ₹43K And ₹67K Salary

Gratuity is a financial reward extended by an employer to employees who have remained committed to the organisation for several years. It is seen as a gesture of gratitude for long-standing service and is regulated under the Payment of Gratuity Act, 1972. Employees who have completed a minimum of five years in service may be eligible for this benefit. This article explores when gratuity is payable, how it is calculated, and what a salary of ₹28,000, ₹43,000, or ₹67,000 could yield after more than seven years of work.

When Does Gratuity Become Payable?

Gratuity is not tied only to retirement. According to experts, employees can receive this benefit under several conditions, provided they meet the service duration criterion:

• Voluntary Retirement or Resignation: If an employee resigns or opts for voluntary retirement after at least five years of uninterrupted service, gratuity becomes payable.

Superannuation: On reaching the official retirement age, gratuity is automatically applicable.

Death or Disability: If an employee passes away or becomes disabled due to an accident or illness, gratuity is payable regardless of service length.

For the Payment of Gratuity Act to apply, the company must employ a minimum of ten individuals. Once covered, an organisation cannot opt out of this legal obligation.

How is the Gratuity Amount Determined?

The gratuity payout hinges on two key factors: the number of years served in the company and the last basic salary drawn. Significantly, if an employee has worked for more than six months in a given year, the service period is rounded up to the next full year for calculation purposes.

The commonly used formula is:

Gratuity = (Last Drawn Salary × Number of Years Worked × 15) ÷ 26

Here:

• 15 represents the wage for 15 days of each year served.
  
  
  
• 26 signifies the average number of working days in a month (excluding Sundays).
  
  
  

Gratuity Calculation for ₹28,000 Salary Over 7 Years

Let’s take an example of an employee who has completed 7 years and 3 months of service. Since the three months exceed the six-month threshold, the total service is rounded to 7 years.

Using the formula:

Gratuity = (28,000 × 7 × 15) ÷ 26 = ₹1,13,076

This calculation shows that an employee earning ₹28,000 in basic monthly salary could receive over ₹1.13 lakh after serving just over seven years.

Gratuity Calculation for ₹43,000 Salary Over 7 Years

Similarly, for someone drawing ₹43,000 as their last basic salary with the same service length:

Gratuity = (43,000 × 7 × 15) ÷ 26 = ₹1,73,653

This demonstrates how a higher basic salary substantially increases the gratuity amount payable.

Gratuity Calculation for ₹67,000 Salary Over 7 Years

For a senior employee with a basic salary of ₹67,000, the gratuity would be:

Gratuity = (67,000 × 7 × 15) ÷ 26 = ₹2,70,576

This suggests that employees with longer service and higher pay stand to gain a significant amount as a one-time settlement.

Why Gratuity Matters in Long-Term Financial Planning

According to HR and financial advisors, gratuity serves as a safety net and can play a crucial role in one’s retirement planning. It’s a one-time benefit that does not attract regular deductions during employment but can deliver a substantial payout at the end. Employees planning their financial futures are often advised to include this component while forecasting their retirement corpus.

Additionally, gratuity payouts are exempt from taxation up to a certain limit under prevailing income tax laws, making it a tax-efficient benefit for eligible individuals.

Can Employers Avoid Paying Gratuity?

As per Indian labour law, organisations that fall under the ambit of the Payment of Gratuity Act are legally bound to disburse gratuity. There is no provision for voluntary withdrawal or exemption once an organisation qualifies under the Act.

The law is designed to safeguard employee interests, and any non-compliance by employers can attract penalties, further reinforcing the importance of understanding one’s rights.

Gratuity is not merely a goodwill gesture but a legally mandated reward that recognises an employee's loyalty and commitment. Whether you’re approaching retirement or planning a switch after long years of service, knowing how much gratuity you’re entitled to can help you make informed financial decisions.

Disclaimer: This article is meant for informational purposes only. Readers are advised to consult with financial advisors or legal experts for personalised guidance based on their employment terms and company policies.