Question 1

Is gratuity taxable?

Accepted Answer

For government employees, gratuity is fully exempt from tax. For private sector employees covered under the Payment of Gratuity Act, gratuity up to ₹20 lakhs is tax-exempt.

Question 2

What if my tenure is 5 years and 7 months?

Accepted Answer

Under the Payment of Gratuity Act, if your service in the final year is more than 6 months, it is rounded up to the next full year. Therefore, your tenure for calculation will be 6 years.

Question 3

Does gratuity calculation include HRA?

Accepted Answer

No, the calculation only considers your Basic Salary and Dearness Allowance (DA). House Rent Allowance (HRA) and other allowances are not included.

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