Tax
Gratuity
A lump sum an employer pays you for long service, largely tax-free up to a limit.
Gratuity is a reward for sticking with an employer, usually payable after five years of continuous service.
It is calculated on your last drawn salary and years worked, and is tax-free up to ₹20L.
It is a genuine bonus for loyalty, paid when you leave, retire, or in certain other cases.
For example
Leave a job after 10 years and gratuity based on your last salary could be a few lakhs, most or all of it tax-free.