Gratuity is the payment made for the past services of the employee by the employer. Calculation of gratuity is very easy, however many people are confused while calculate the value of gratuity and income tax thereof.
Gratuity received by an employee on his retirement is taxable under the head Salary.
Gratuity is divided into three parts for easily understand.
Government employee and employee of local authorities.
Under this head the entire amount received of gratuity is free from tax.
for more info go to