diff --git a/erpnext/payroll/doctype/gratuity/gratuity.js b/erpnext/payroll/doctype/gratuity/gratuity.js
index d4f7c9ca091..3d69c46e55a 100644
--- a/erpnext/payroll/doctype/gratuity/gratuity.js
+++ b/erpnext/payroll/doctype/gratuity/gratuity.js
@@ -3,6 +3,14 @@
 
 frappe.ui.form.on('Gratuity', {
 	setup: function (frm) {
+		frm.set_query("salary_component", function () {
+			return {
+				filters: {
+					type: "Earning"
+				}
+			};
+		});
+
 		frm.set_query("expense_account", function () {
 			return {
 				filters: {
@@ -24,7 +32,7 @@ frappe.ui.form.on('Gratuity', {
 		});
 	},
 	refresh: function (frm) {
-		if (frm.doc.docstatus == 1 && frm.doc.status == "Unpaid") {
+		if (frm.doc.docstatus == 1 && !frm.doc.pay_via_salary_slip && frm.doc.status == "Unpaid") {
 			frm.add_custom_button(__("Create Payment Entry"), function () {
 				return frappe.call({
 					method: 'erpnext.accounts.doctype.payment_entry.payment_entry.get_payment_entry',
diff --git a/erpnext/payroll/doctype/gratuity/gratuity.json b/erpnext/payroll/doctype/gratuity/gratuity.json
index 197089567df..1fd1cecaaaa 100644
--- a/erpnext/payroll/doctype/gratuity/gratuity.json
+++ b/erpnext/payroll/doctype/gratuity/gratuity.json
@@ -1,7 +1,7 @@
 {
  "actions": [],
  "autoname": "HR-GRA-PAY-.#####",
- "creation": "2020-08-05 20:52:13.024683",
+ "creation": "2022-01-27 16:24:28.200061",
  "doctype": "DocType",
  "editable_grid": 1,
  "engine": "InnoDB",
@@ -16,6 +16,9 @@
   "company",
   "gratuity_rule",
   "section_break_5",
+  "pay_via_salary_slip",
+  "payroll_date",
+  "salary_component",
   "payable_account",
   "expense_account",
   "mode_of_payment",
@@ -78,18 +81,20 @@
    "reqd": 1
   },
   {
+   "depends_on": "eval: !doc.pay_via_salary_slip",
    "fieldname": "expense_account",
    "fieldtype": "Link",
    "label": "Expense Account",
-   "options": "Account",
-   "reqd": 1
+   "mandatory_depends_on": "eval: !doc.pay_via_salary_slip",
+   "options": "Account"
   },
   {
+   "depends_on": "eval: !doc.pay_via_salary_slip",
    "fieldname": "mode_of_payment",
    "fieldtype": "Link",
    "label": "Mode of Payment",
-   "options": "Mode of Payment",
-   "reqd": 1
+   "mandatory_depends_on": "eval: !doc.pay_via_salary_slip",
+   "options": "Mode of Payment"
   },
   {
    "fieldname": "gratuity_rule",
@@ -151,23 +156,45 @@
    "read_only": 1
   },
   {
+   "depends_on": "eval: !doc.pay_via_salary_slip",
    "fieldname": "payable_account",
    "fieldtype": "Link",
    "label": "Payable Account",
-   "options": "Account",
-   "reqd": 1
+   "mandatory_depends_on": "eval: !doc.pay_via_salary_slip",
+   "options": "Account"
   },
   {
    "fieldname": "cost_center",
    "fieldtype": "Link",
    "label": "Cost Center",
    "options": "Cost Center"
+  },
+  {
+   "default": "1",
+   "fieldname": "pay_via_salary_slip",
+   "fieldtype": "Check",
+   "label": "Pay via Salary Slip"
+  },
+  {
+   "depends_on": "pay_via_salary_slip",
+   "fieldname": "payroll_date",
+   "fieldtype": "Date",
+   "label": "Payroll Date",
+   "mandatory_depends_on": "pay_via_salary_slip"
+  },
+  {
+   "depends_on": "pay_via_salary_slip",
+   "fieldname": "salary_component",
+   "fieldtype": "Link",
+   "label": "Salary Component",
+   "mandatory_depends_on": "pay_via_salary_slip",
+   "options": "Salary Component"
   }
  ],
  "index_web_pages_for_search": 1,
  "is_submittable": 1,
  "links": [],
- "modified": "2022-01-19 12:54:37.306145",
+ "modified": "2022-02-02 14:00:45.536152",
  "modified_by": "Administrator",
  "module": "Payroll",
  "name": "Gratuity",
diff --git a/erpnext/payroll/doctype/gratuity/gratuity.py b/erpnext/payroll/doctype/gratuity/gratuity.py
index 476990a88e1..939634a9310 100644
--- a/erpnext/payroll/doctype/gratuity/gratuity.py
+++ b/erpnext/payroll/doctype/gratuity/gratuity.py
@@ -21,7 +21,10 @@ class Gratuity(AccountsController):
 			self.status = "Unpaid"
 
 	def on_submit(self):
-		self.create_gl_entries()
+		if self.pay_via_salary_slip:
+			self.create_additional_salary()
+		else:
+			self.create_gl_entries()
 
 	def on_cancel(self):
 		self.ignore_linked_doctypes = ['GL Entry']
@@ -64,6 +67,19 @@ class Gratuity(AccountsController):
 
 		return gl_entry
 
+	def create_additional_salary(self):
+		if self.pay_via_salary_slip:
+			additional_salary = frappe.new_doc('Additional Salary')
+			additional_salary.employee = self.employee
+			additional_salary.salary_component = self.salary_component
+			additional_salary.overwrite_salary_structure_amount = 0
+			additional_salary.amount = self.amount
+			additional_salary.payroll_date = self.payroll_date
+			additional_salary.company = self.company
+			additional_salary.ref_doctype = self.doctype
+			additional_salary.ref_docname = self.name
+			additional_salary.submit()
+
 	def set_total_advance_paid(self):
 		paid_amount = frappe.db.sql("""
 			select ifnull(sum(debit_in_account_currency), 0) as paid_amount
diff --git a/erpnext/payroll/doctype/gratuity/gratuity_dashboard.py b/erpnext/payroll/doctype/gratuity/gratuity_dashboard.py
index aeadba186d0..771a6fea84a 100644
--- a/erpnext/payroll/doctype/gratuity/gratuity_dashboard.py
+++ b/erpnext/payroll/doctype/gratuity/gratuity_dashboard.py
@@ -10,7 +10,7 @@ def get_data():
 		'transactions': [
 			{
 				'label': _('Payment'),
-				'items': ['Payment Entry']
+				'items': ['Payment Entry', 'Additional Salary']
 			}
 		]
 	}
diff --git a/erpnext/payroll/doctype/gratuity/test_gratuity.py b/erpnext/payroll/doctype/gratuity/test_gratuity.py
index 93cba06da15..90e8061fed8 100644
--- a/erpnext/payroll/doctype/gratuity/test_gratuity.py
+++ b/erpnext/payroll/doctype/gratuity/test_gratuity.py
@@ -18,27 +18,25 @@ from erpnext.regional.united_arab_emirates.setup import create_gratuity_rule
 
 test_dependencies = ["Salary Component", "Salary Slip", "Account"]
 class TestGratuity(unittest.TestCase):
-	@classmethod
-	def setUpClass(cls):
+	def setUp(self):
+		frappe.db.delete("Gratuity")
+		frappe.db.delete("Additional Salary", {"ref_doctype": "Gratuity"})
+
 		make_earning_salary_component(setup=True, test_tax=True, company_list=['_Test Company'])
 		make_deduction_salary_component(setup=True, test_tax=True, company_list=['_Test Company'])
 
-	def setUp(self):
-		frappe.db.sql("DELETE FROM `tabGratuity`")
-
 	def test_get_last_salary_slip_should_return_none_for_new_employee(self):
 		new_employee = make_employee("new_employee@salary.com", company='_Test Company')
 		salary_slip = get_last_salary_slip(new_employee)
 		assert salary_slip is None
 
-	def test_check_gratuity_amount_based_on_current_slab(self):
+	def test_check_gratuity_amount_based_on_current_slab_and_additional_salary_creation(self):
 		employee, sal_slip = create_employee_and_get_last_salary_slip()
 
 		rule = get_gratuity_rule("Rule Under Unlimited Contract on termination (UAE)")
+		gratuity = create_gratuity(pay_via_salary_slip=1, employee=employee, rule=rule.name)
 
-		gratuity = create_gratuity(employee=employee, rule=rule.name)
-
-		#work experience calculation
+		# work experience calculation
 		date_of_joining, relieving_date = frappe.db.get_value('Employee', employee, ['date_of_joining', 'relieving_date'])
 		employee_total_workings_days = (get_datetime(relieving_date) - get_datetime(date_of_joining)).days
 
@@ -64,6 +62,9 @@ class TestGratuity(unittest.TestCase):
 
 		self.assertEqual(flt(gratuity_amount, 2), flt(gratuity.amount, 2))
 
+		# additional salary creation (Pay via salary slip)
+		self.assertTrue(frappe.db.exists("Additional Salary", {"ref_docname": gratuity.name}))
+
 	def test_check_gratuity_amount_based_on_all_previous_slabs(self):
 		employee, sal_slip = create_employee_and_get_last_salary_slip()
 		rule = get_gratuity_rule("Rule Under Limited Contract (UAE)")
@@ -117,8 +118,8 @@ class TestGratuity(unittest.TestCase):
 		self.assertEqual(flt(gratuity.paid_amount,2), flt(gratuity.amount, 2))
 
 	def tearDown(self):
-		frappe.db.sql("DELETE FROM `tabGratuity`")
-		frappe.db.sql("DELETE FROM `tabAdditional Salary` WHERE ref_doctype = 'Gratuity'")
+		frappe.db.rollback()
+
 
 def get_gratuity_rule(name):
 	rule = frappe.db.exists("Gratuity Rule", name)
@@ -141,9 +142,14 @@ def create_gratuity(**args):
 	gratuity.employee = args.employee
 	gratuity.posting_date = getdate()
 	gratuity.gratuity_rule = args.rule or "Rule Under Limited Contract (UAE)"
-	gratuity.expense_account = args.expense_account or 'Payment Account - _TC'
-	gratuity.payable_account = args.payable_account or get_payable_account("_Test Company")
-	gratuity.mode_of_payment = args.mode_of_payment or 'Cash'
+	gratuity.pay_via_salary_slip = args.pay_via_salary_slip or 0
+	if gratuity.pay_via_salary_slip:
+		gratuity.payroll_date = getdate()
+		gratuity.salary_component = "Performance Bonus"
+	else:
+		gratuity.expense_account = args.expense_account or 'Payment Account - _TC'
+		gratuity.payable_account = args.payable_account or get_payable_account("_Test Company")
+		gratuity.mode_of_payment = args.mode_of_payment or 'Cash'
 
 	gratuity.save()
 	gratuity.submit()