Explanation:

Rs. 20,00,000

Gratuity is given by the employer to his/her employee for the services rendered by him during the period of employment. Upon

(a) It must be upon his retirement, or

(b) Upon his resignation or retirement, or

(c) Upon his demise or disability brought on by an accident or illness

Gratuity payable depends on two factors: last drawn salary and years of service.

To calculate how much gratuity is payable, the Payment of Gratuity Act, 1972 has divided non-government employees into two categories: a) Employees covered under the Act b) Employees not covered under the Act.

The employees will benefit from the rise in the gratuity limit from 3.5 lacs to 10 lacs under Section 4(3). The gratuity cap was also enhanced from Rs. 3.5 lac to Rs. 10 lac in Section 10(10) of the Income Tax Act, 1961. However, as of March 29, 2018, the gratuity limit for individuals covered by the Payment of Gratuity Act, 1972, has risen from 10 lacs to 20 lacs through the notification S.O. 1420 (E) dated March 29, 2018.