Gratuity in India

Overview

Gratuity in India is a statutory benefit paid to employees who have rendered continuous service for at least five years. It is a way for employers to express gratitude to their employees for their loyalty and service.

Applicability

The Payment of Gratuity Act applies to:

• Every factory, mine, oilfield, plantation, port, and railway company.
• Every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed.

---

Tax Benefits

Gratuity received by an employee is tax-exempt up to a certain limit under the Income Tax Act.

• Government Employees: Fully exempt.
• Private Employees: Exempt up to ₹20 Lakhs.