This is important news for employees. A significant change has been made to the gratuity rules, which will greatly benefit them. Gratuity is essential for employees. Employees receive this payment after years of work. In India, gratuity is regulated under the Payment of Gratuity Act, 1972. This amount is paid in lump sum upon retirement or retirement. In the meantime, learn whether gratuity is taxable and how it is calculated.

What is the eligibility for gratuity?

To be eligible for gratuity, an employee must have worked for a company for at least one consecutive year. Only then does the employee receive gratuity. Meanwhile, under the new labor law, fixed-term employees now receive gratuity after working for one year. This will benefit employees.

Gratuity is calculated based on your last month's salary. It's calculated as follows: Last × 15 × (hours worked) ÷ 26. If your last salary was ₹50,000 and you worked for 10 years, you could receive a gratuity of ₹2.88 lakh.

Is gratuity taxable?

Gratuity is taxable in some situations and not in others. For government employees, gratuity is completely tax-free. For employees working in the private sector, gratuity up to ₹20 lakh is tax-free. If you receive a lump sum gratuity of more than this amount, it is taxable. If you receive a gratuity of ₹25 lakh, ₹20 lakh is tax-free and the remaining ₹5 lakh is taxable.

PC: SaamTV