Question 1

What is Gratuity?

Accepted Answer

Gratuity is a lump sum payment given by an employer to an employee who has rendered continuous service for 5 or more years. It is calculated as (15 × Last Drawn Salary × Years of Service) / 26.

Question 2

Is Gratuity tax-exempt?

Accepted Answer

Yes, up to ₹20,00,000 (₹20 lakhs) under Section 10(10) of the Income Tax Act. Any amount above this limit is taxable.