PeopleOS provisions gratuity automatically every month, with actuarial valuation hooks.
Start freeUnder the Payment of Gratuity Act 1972, employees who complete at least 5 years of continuous service with the same employer are eligible. Exception: in case of death or disablement, the 5-year minimum is waived. Employees of factories, mines, oilfields, plantations, ports, railways, shops, and establishments employing 10 or more persons are covered.
Gratuity = (Last drawn Basic + DA) × 15 days × completed years of service ÷ 26. Service of more than 6 months in the final year is rounded up to a full year. The maximum tax-free gratuity is ₹20 lakh under Section 10(10)(ii) of the Income Tax Act for non-government employees.
For government employees, gratuity received on retirement or death is fully exempt. For other employees covered under the Payment of Gratuity Act, gratuity is exempt up to ₹20 lakh (cumulative across all employers). Any amount above ₹20 lakh is taxable as salary in the year of receipt.
The Code on Social Security 2020 (part of Labour Code 2025) preserves the 15-day formula but redefines "wages" — Basic + DA + Retaining Allowance must now be at least 50% of total remuneration. Most employers see higher gratuity provisioning because Basic typically goes up under the new wage definition.
Generally no — the 5-year minimum is statutory. Exceptions: (a) death or disablement of the employee, (b) employees covered under fixed-term employment contracts under the Industrial Relations Code 2020 are eligible pro-rata regardless of duration, (c) in case of working journalists, the threshold is reduced to 3 years.