Gratuity Calculation.
Gratuity is now payable under the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972. We calculate what is due on each exit, including for fixed-term employees, who now qualify after one year of service, and we can work with your actuary on the gratuity liability shown in your accounts.
Typically 1–2 working days per exit once service and wage records are confirmed. The Code requires payment within thirty days of gratuity becoming payable.
A partner — a chartered accountant or company secretary — from the first call to sign-off.
Based on your situation, and fixed in writing before any work starts.
Is this for you?
- Employers with exits after five or more years of continuous service
- Businesses employing staff on fixed-term contracts
- Companies that need a gratuity provision for audited accounts
- Employers deciding whether to fund gratuity through an insurer-managed scheme
What you receive at the end.
- 01Gratuity computation for each exit
- 02Tax working for the employee
- 03Payment advice
- 04Employee data pack for actuarial valuation, where needed
Gratuity Calculation, step by step.
Typically 1–2 working days per exit once service and wage records are confirmed. The Code requires payment within thirty days of gratuity becoming payable.
- 1
Eligibility check
We confirm continuous service, the reason for exit and whether the five-year condition applies or is relaxed, as it is for death, disablement and fixed-term contracts.
- 2
Wage base
We fix last drawn wages as the Code defines them, adding back allowances where they exceed the permitted share of total pay.
- 3
Gratuity calculation
We compute gratuity at fifteen days' wages for each completed year of service, rounding part years as the rules require, subject to the notified ceiling.
- 4
Payment and tax
We prepare the payment working and the employee's tax treatment, and track payment within the period the Code allows.
- 5
Liability support
At year-end, we give your actuary the service and wage data and review the valuation inputs.
What we need from you.
Don't have everything yet? We send a short checklist after the first call and work with what you have.
- Appointment letter and date of joining
- Last drawn salary with component breakup
- Exit letter showing date and reason
- Gratuity nomination on record
- Fixed-term contract, where applicable
- Details of any gratuity trust or insurance policy
The fee depends on your situation. After a short call, the partner who will do the work tells you what's involved and gives you a fixed fee in writing — before any work begins.
- Government fees and statutory charges are billed at actuals.
- When you pay — upfront, in stages or on completion — is agreed in writing with the fee.
Questions about Gratuity Calculation.
Ready to discuss Gratuity Calculation?
30-minute confidential call — no proposal, no commitment. A partner will write back within one business day.