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Gratuity amount
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Tax-exempt amount
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Taxable amount
Formula: (15 × Last drawn salary × Years of service) ÷ 26, for employees covered under the Payment of Gratuity Act (establishments with 10+ employees). Government employees receive full tax exemption with no ceiling. Private sector employees are exempt up to ₹20 lakh (lifetime, across all employers) under Section 10(10) — any amount above that is taxable as salary income. Requires 5+ years of continuous service, except in case of death or disability.