Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Gratuity is a statutory lump-sum benefit paid by employers to employees completing minimum qualifying service upon retirement, resignation, or death.
Gratuity is a thank-you bonus from employer when you leave after 5+ years — calculated from salary and years worked.
Payment of Gratuity Act covers establishments with 10+ employees. Formula: (Last drawn salary × 15 × years of service) / 26. Tax-exempt up to ₹20 lakh for eligible private sector employees. Paid on superannuation, retirement, death, or disablement.
Employee with ₹80,000 last drawn basic, 20 years service: Gratuity = (80,000 × 15 × 20) / 26 ≈ ₹9.23 lakh, tax-free within exemption limit.
Gratuity = (Last Drawn Salary × 15 × Years of Service) ÷ 26Minimum 5 years continuous service in covered establishment. Death/disablement exceptions apply without 5-year requirement.
Exempt up to ₹20 lakh for private sector under Section 10(10). Amount above exemption taxed as salary.
Generally not payable on voluntary resignation before 5 years except death or disablement circumstances.