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Gratuity calculation as per gratuity act 1972

As we are Pvt Ltd company, and we paid the gratuity amount to the employee as per his email only. The ex-employee has not submitted the claim form to the company. We paid the amount on the basis of ( last drawn basic* a number of service years * 15/26). Now ex-employee is claiming the amount to be paid on the basis of 

As per the Gratuity Act 1972, The Formula Should be

Basic+DA * Years * 15 / 26 if the DA is not applicable in the company then 120% of Basic is considered as a DA.


As per my knowledge, The Gratuity amount should be

(Basic + DA 120%)

Is there is any such rules applicable, as we did not have DA in our salary slips?



 2 Replies

Kumar Doab (FIN)     21 September 2017

You may go thru: Payment of Gratuity Act,1972;S; 2,4,7

Calculate Gratuity: { (Basic+DA)/26*15*No. of years in service}

(Basic+DA) is as per last drawn salary.

NO. of years; If employee has worked for more than 5 calendar years then for last year take period

> 6 months=1Y

< 6 months=0Y 

Kumar Doab (FIN)     21 September 2017

You seem to have already checked; DA is not applicable to your establishment /applied in your establishment, employee…….. If establishment is paying wages equal to or more than applicable enactments to employee/establishment e.g; Min.Wages Act, then there should be no error in calculation…

Even if employee has not submitted the form as mentioned by you the establishment/ employer could have supplied the Notice of Determination of Gratuity, payment of Gratuity……. on its own. Employer/designated employee in establishment say HR could have supplied FormI to employee.

If payment of Gratuity is not made within 30days from LWD the interest @10% is applicable for the delayed period. You can reply to communication of employee and mention that the amount paid is correct, if it is correct


Employer/designated employee in establishment do not have to pay as per calculation of employee but in concurrence to the provisions of Act. If there is any balance, the designated employee may process and pay and close the matter

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