*Most private sector employees are covered by the Payment of Gratuity Act.
₹50,000
Estimated Gratuity
Total Payable Amount
₹1,44,231
Tax Free Portion₹1,44,231
Taxable Portion₹0
ℹ️ Tax-free limit is now ₹20 Lakhs (increased from ₹10L).
About Gratuity
Gratuity is a monetary benefit given by an employer to an employee for services rendered to the organization. It is paid at the time of retirement, resignation, or death.
Eligibility Formula
For employees covered under the Payment of Gratuity Act, the formula is:Gratuity = (15 × Last Drawn Salary × Tenure) / 26
- Last Drawn Salary: Basic Salary + Dearness Allowance (DA).
- Tenure: Number of completed years of service (rounded off).
- 26: Represents the number of working days in a month.
Tax Exemption
- For government employees: Fully tax-exempt.
- For private employees: Tax-exempt up to ₹20 Lakhs (Least of: Formula based gratuity, ₹20 Lakhs, or Actual gratuity received).