Gratuity is a voluntary payment made by an employer in appreciation of the services provided by the employee. Use EZTax gratuity calculator to calculate gratuity and Tax on gratuity.
Most Public Sector, Central and State Government, Civil Service, and certain local authority employees can get the gratuity after leaving under specific conditions. Gratuity is taxable and available to employees with 5 years of continuous service.
If the employer has more than 10 employees, on any day of the preceding twelve months, gratuity is applicable, and is a lump sum payment to employees with five or more years of service.
All employees now receive gratuity upon resignation or retirement. It is a voluntary contribution made by an employer to appreciate employee services.
The employees will get exemption for the amount received in the form of Gratuity. Section 10(10) of Income Tax Act 1961 covers the Gratuity.
The following employees are covered under Gratuity.
No, the gratuity received during the period of the service is taxable. Gratuity received at the time of resignation or retirement is exempt.
Yes, you can claim exemption for Gratuity u/s 10(10) under Old and New Tax Regime. There is no restriction.