Gratuity | Introduction to Gratuity | Income from Salary | Income Tax | Part 1
Manu Bharadwaj Broadcast・2 minutes read
Gratuity is a monetary benefit given by an employer to an employee in appreciation of good service, provided on retirement, resignation, or in case of accidents after a minimum of five years of service. Tax implications differ for government and non-government employees, with government employees having fully taxable gratuity during service and non-government employees potentially receiving taxable gratuity with exemptions available.
Insights
- Gratuity is a monetary benefit given by an employer to an employee in appreciation of good service, provided on retirement, resignation, or in case of accidents after a minimum of five years of service.
- Tax implications of gratuity differ for government and non-government employees, with government employees facing full taxation on gratuity during service but full exemption post-retirement, while non-government employees may receive taxable gratuity during service with some exemptions.
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Recent questions
What is gratuity?
Gratuity is a monetary benefit given by an employer to an employee in appreciation of good service. It is provided on retirement, resignation, or in case of accidents as a form of appreciation.
How long must an employee work to be eligible for gratuity?
An employee must serve a minimum of five years to be eligible for gratuity.
How is gratuity classified for government and non-government employees?
Gratuity can be classified based on government and non-government employees, with different tax implications. For government employees, gratuity received during service is fully taxable, while post-retirement gratuity is fully exempt. Non-government employees may receive taxable gratuity during service, with certain exemptions available.
What is the process for calculating gratuity?
Calculation of gratuity involves determining the actual amount received, applying exemptions, and calculating taxable gratuity based on specific formats for government and non-government employees.
When is gratuity provided to employees?
Gratuity is provided on retirement, resignation, or in case of accidents as a form of appreciation for the employee's service.
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Summary
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Understanding Gratuity: Eligibility, Tax Implications, Calculation
- Gratuity is a monetary benefit given by an employer to an employee in appreciation of good service.
- Gratuity is provided on retirement, resignation, or in case of accidents as a form of appreciation.
- An employee must serve a minimum of five years to be eligible for gratuity.
- Gratuity can be classified based on government and non-government employees, with different tax implications.
- For government employees, gratuity received during service is fully taxable, while post-retirement gratuity is fully exempt.
- Non-government employees may receive taxable gratuity during service, with certain exemptions available.
- Calculation of gratuity involves determining the actual amount received, applying exemptions, and calculating taxable gratuity based on specific formats for government and non-government employees.
