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How do I calculate my gratuity?
Gratuity is calculated using the formula:
G = (15 × Last Drawn Salary × Tenure in Years) / 26.
The last drawn salary includes Basic Pay and Dearness Allowance (DA). Only completed years of service are considered.
Can gratuity be cut from salary?
No, gratuity is an additional benefit provided by the employer and is not deducted from the employee’s salary. It is paid separately when an employee completes at least 5 years of continuous service.
How much gratuity (%) is deducted from the salary?
Gratuity is not deducted from salary. However, some companies may show gratuity as part of the CTC (Cost to Company) to reflect overall compensation.
How much is gratuity in CTC?
Many companies include gratuity as a part of CTC. Typically, it is 4.81% of the Basic Salary per year (assuming the employee stays for at least 5 years).
Is gratuity tax-free?
Yes, gratuity is tax-free up to ₹20 lakhs in a lifetime for private sector employees under Section 10(10) of the Income Tax Act. Any amount beyond this is taxable as per income tax slabs.
How much gratuity in 8th pay commission?
The 8th Pay Commission has not been implemented yet, but gratuity is expected to be aligned with inflation-adjusted pay scales similar to the 7th Pay Commission.
Is gratuity capped at 20 lakhs?
Yes, as per government regulations, the maximum tax-free gratuity limit is ₹20 lakhs for private sector employees. For government employees, there may be different provisions based on service rules.