For instance, if the employee has a total service of 20 years, 10 months and 25 days, only 20 years will be factored into the calculation. Tax treatment of gratuity :- For the purpose of exemption of gratuity under sec.10 (10) the employees are divided under three categories: 1. Gratuity is calculated at 15 days wages last drawn by the employee for each completed year of service. The monthly wage is divided by 26 and multiplied by 15. In computing a completed year of service the period in excess of six months shall be taken as a full year. For seasonal workers the formula for the calculation of gratuity is
This Gratuity Calculator lets you calculate Gratuity Tax Exemption. Gratuity is the amount of payment made by an employer to an employee in appreciation of the past services rendered by the employee which is received at the time of retirement or in the event of death. Gratuity is a monetary benefit paid out by the organization to its employees as a form of gratitude for the services rendered by them. It is payable based on a certain defined formula and guaranteed if basic conditions are met.