Gratuity is a monetary benefit provided by an employer to an employee as a token of appreciation for their long-term service to the organization. In India, it is regulated by the Payment of Gratuity Act, 1972.
Where 'Last Drawn Salary' includes Basic Pay and Dearness Allowance. The factor 15/26 represents 15 days of salary for every 26 working days in a month.
Any amount exceeding the government-specified tax-free limit (currently ₹20 Lakhs for most private sector employees) is taxable as per the employee's income tax slab.
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