Gratuity deep guide
Labour Codes + tax

GRATUITY FORMULA (Code on Social Security 2020, section 53 — 21 November 2025 se; Payment of Gratuity Act 1972 repeal): GRATUITY = wages × 15 × service ke saal ÷ 26. WAGES = basic + DA + retaining allowance, PLUS allowances ka woh hissa jo total pay ke 50% se upar hai.

EXAMPLE: ₹50,000 wages, 20 saal = ₹5,76,923. ADD-BACK EXAMPLE: basic + DA ₹30,000 + allowances ₹50,000 → wages ₹40,000 (₹10,000 add-back).

ELIGIBLE EVENTS: superannuation, retirement, resignation, death, disablement, fixed-term contract ka ant.

FY 2026-27 se Income-tax Act 2025 lagu hai (purana Section 10(10) ab nahi): section 19(1) Table Sl. No. 5 — statutory gratuity gratuity-law ke under due amount tak deductible; Sl.

No. 6 — baaki gratuity: amount received, Central Government ka notified limit, aur har completed saal ke liye aadhe mahine ki average basic + DA, inme se jo kam ho. Statutory ceiling ₹20 lakh hai, isliye covered employee ki statutory gratuity usse upar nahi jaati; employer ne ceiling se upar jo diya woh slab rate par taxable.

Naye Act ke notified limit ka notification humne primary source par verify nahi kiya — apne employer / CA se confirm karein.

PERMANENT employee: 5 saal continuous service. FIXED-TERM employee: 1 saal (pro rata gratuity) — Labour Codes ka naya rule.

WORKING JOURNALIST: 3 saal. DEATH ya DISABLEMENT: koi minimum nahi.

Section 54: ek saal continuous maana jata hai agar pichhle 12 mahine me 240 din actually kaam kiya (mine underground / chhe din se kam hafta: 190 din). Permanent employee 5 saal se pehle resign kare to statutory gratuity nahi.

GOVERNMENT EMPLOYEES: death-cum-retirement gratuity (DCRG) poori tax-exempt (Income-tax Act 2025 section 19 table); formula unke pension rules se. PRIVATE SECTOR: Code on Social Security 2020 ka formula (wages × 15 × saal ÷ 26), ₹20 lakh statutory ceiling; exempt amount se upar slab rate par taxable.

CHHOTE EMPLOYER (Code ke gratuity chapter me covered nahi): gratuity dena voluntary; tax formula aadha mahina per completed year.

(1) Apni CTC ka structure dekhein — allowances total pay ke 50% se zyada hain to add-back se gratuity basic se zyada banti hai. (2) Fixed-term contract par ho to 1 saal poora hone ka dhyan rakhein. (3) Aakhri saal 6 mahine se ZYADA ho tabhi poora gina jata hai — exit date ek-do din aage badhane se ek poore saal ki gratuity mil sakti hai. (4) Ceiling se upar ka hissa taxable — retirement year ki planning CA ke saath karein. Calculator: /in/tools/gratuity-calculator.