Income tax gratuity

(A) Employees Covered Under the Payment of Gratuity Act

Calculation of amount of gratuity exempted from tax :The least of the following is exempt from tax:

• Last salary (basic + DA)* number of years of employment* 15/26;
• Rs. 20 lakhs (which has been hiked from Rs. 10 Lakh as per the amendment);
• Gratuity Actually received

(B) Employees Not Covered Under the Payment of Gratuity Act

Calculation of amount of gratuity exempted from tax  :: The least of the following are exempt from tax:

• • Last 10 month’s average salary (basic + DA)* number of years of employment* 1/2;
  • Rs. 10 lakhs (the hike to Rs 20 lakhs is not applicable for employees not covered under the Payment of Gratuity Act)
  • Gratuity actually received

(A) Employees Covered Under the Payment of Gratuity Act

Calculation of amount of gratuity exempted from tax :The least of the following is exempt from tax:

• Last salary (basic + DA)* number of years of employment* 15/26;
• Rs. 20 lakhs (which has been hiked from Rs. 10 Lakh as per the amendment);
• Gratuity Actually received

(B) Employees Not Covered Under the Payment of Gratuity Act

Calculation of amount of gratuity exempted from tax  :: The least of the following are exempt from tax:

• • Last 10 month’s average salary (basic + DA)* number of years of employment* 1/2;
  • Rs. 10 lakhs (the hike to Rs 20 lakhs is not applicable for employees not covered under the Payment of Gratuity Act)
  • Gratuity actually received