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of <h1>Gratuity Tax Rules: Taxable During Employment, Exempt on Retirement/Resignation, Capped at Rs. 20 Lakhs, Forfeitable for Misconduct.</h1> Gratuity is a payment made by employers to employees who have completed at least five years of service. It is fully taxable if received during employment but can be exempt upon death, retirement, or resignation, subject to certain limits. Government employees receive full tax exemption on gratuity. For others, exemptions are calculated based on specific formulas and capped at Rs. 20,00,000. The exemption considers the last drawn salary, average salary over ten months, and government-specified limits. Gratuity can be forfeited if an employee is terminated for misconduct. The aggregate exemption limit across multiple employers is Rs. 20,00,000.
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