India-native entity Foo Falcon Tech Pvt Ltd · CIN U72900KA2022PTC163007 47 engineers paid · Apr 2026 14 US/UK companies on the entity 0 notices since founding 4 yrs on the books 5-day contractual Go-Live SLA $149/employee/month · first month free PF · ESI · S&E across all 28 states + 8 UTs Income Tax Act 2025 · Form 130 ready DPDP Act 2023 · 24-hr breach SLA

India gratuity calculator.

Calculate gratuity payouts for India employees under the Payment of Gratuity Act 1972. Continuous service eligibility, accrual math, and LIC-funded payout examples. Employer of Record gratuity, transparent.

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4 yrs On the books
47 Engineers paid · Apr 2026
14 US/UK companies on the entity
0 Notices since founding
Foo Falcon Pvt Ltd · CIN U72900KA2022PTC163007 · Incorporated 28 Jun 2022
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How gratuity in India actually works.

Gratuity is a statutory severance payout under India's Payment of Gratuity Act 1972. The employer accrues 4.81% of basic salary every month and pays out a lump sum when the employee exits after completing 4 years and 240 days of continuous service. For an Employer of Record like Versatile, the gratuity accrual is fully funded via a Group Gratuity Scheme with LIC, so the payout is automated and predictable.

Accrual rate, 4.81% of basic

Per month, applied to basic salary (not gross). Funded into a group gratuity policy with LIC.

Eligibility, 4 years + 240 days

Continuous service. Calculated to the day. Versatile maintains the service-period documentation in the payroll register.

Payout formula, (15/26) × Basic × Years

Last drawn basic salary, multiplied by 15/26, multiplied by completed years of service. Capped at ₹20 lakh under Section 10(10) of the Income Tax Act.

Tax treatment, exempt up to ₹20 lakh

Payments under ₹20 lakh are tax-exempt for the employee. Anything above is taxable.

LIC-funded payout, automated

Versatile's group gratuity scheme with LIC pays out on certified exit. No employer-side cash crunch.

On EOR conversion, handed off

When you transition from Versatile EOR to your own Indian entity, the gratuity accrual transfers via Group Policy Assignment to your new gratuity fund. Continuity preserved.

ItemVersatile handles
Basic salary (last drawn)₹80,000/month example
Completed years of service5 years (5×12 months = 60 months)
Gratuity formula(15/26) × ₹80,000 × 5 = ₹2,30,769
Versatile monthly accrual4.81% × ₹80,000 = ₹3,848/month
Funded viaLIC Group Gratuity Scheme
Tax to employeeZero (below ₹20 lakh exemption)

Versatile handles gratuity, structurally.

Group gratuity policy with LIC · 4.81% monthly accrual · Automated payout on exit · Continuity preserved on EOR-to-entity transition

Talk to us about your India team →

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Questions we hear most.

When is gratuity payable in India?
On exit (resignation, retirement, death, or disability), provided the employee has completed 4 years and 240 days of continuous service. Versatile's payroll register maintains the service-period documentation to the day.
Payouts up to ₹20 lakh are tax-exempt under Section 10(10) of the Income Tax Act for non-government employees. Anything above is taxable. Versatile coordinates the tax treatment in the exit Form 16.
Through a Group Gratuity Scheme with Life Insurance Corporation of India (LIC). 4.81% of basic salary accrues monthly into the policy. On certified exit, LIC pays out the entitled amount directly to the employee.
The accrued gratuity transfers via Group Policy Assignment to your new entity's gratuity fund (typically also an LIC group policy). The employee's service period and accrual continuity are preserved.
Under the Payment of Gratuity Act, the 4-year-240-day eligibility threshold is statutory. Versatile cannot pay gratuity below that threshold. We can structure a separation bonus on exit if you and the employee agree to it, but it would be taxed differently.

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