Is Gratuity Part of CTC

Is Gratuity part of CTC

You might be wondering, is gratuity part of ctc? Well, let me tell you it’s not. Your cost to company CTC does not include your Gratuity amount. It’s a different calculation from your CTC. Gratuity is paid apart from your monthly salary. Once you complete 5 Years in organization you are eligible to receive a gratuity amount. As per gratuity act 1972 you are entitled to receive Gratuity funds.

Gratuity is a favour that you get as an employee for serving for a company that you work for. You are eligible to receive a Gratuity amount once you complete 5 or more than years in a company. Gratuity should not be a part of ctc. It’s always calculated separately. 

Is Gratuity Part of CTC

Is Gratuity Part of CTC? No, Gratuity is not Part of CTC. Your cost to company CTC is calculated separately from Gratuity funds. Gratuity compulsory for pvt ltd companies which are registered under company act. No matter where gratuity is mentioned in the offer letter or not you are eligible for Gratuity after you complete 5 plus years in a company.

Is Gratuity Amount Taxable in India

Gratuity amount is extra benefits offered to an employee. As you it can be availed after you complete 5 years in a company. You are eligible to receive gratuity funds. You might be wondering: Is Gratuity Amount Taxable?  According to the Central Govt Of India, a recent amendment has approved the maximum limit of gratuity. Earlier it was 10 Lakh INR. Now income tax Exemption on gratuity amount is 20 Lakh INR. Basically you don’t have to pay tax if you are earning upto 20 Lakh as a gratuity amount.  

Income tax Exemption on gratuity amount
Old – 10 Lakh INRNew – 20 Lakh INR
Taxable Gratuity Amount – 1 Lakh INRTaxable Gratuity Amount – 0

As given above table you can see Income tax exemption on gratuity amount in India. As per old amended If you are earning 10 Lakh INR as gratuity income. The taxable amount was 1 Lakh INR. But as per New amended Income tax exemption on gratuity amount in India Taxable amount on gratuity fund is 0 INR. Gratuity income tax exemption Private employees In India is 20 Lakh INR. Where as Government employees has a benefit of availing full tax exempt.

Eligibility Criteria for Gratuity Funds

  • In order for you to receive Gratuity money there are some eligibility criteria set as per Gratuity act 1972. 
  • You as an employee are required to complete at least 5 years  in a company.
  • When you retire from your position in a company.

How to calculate Gratuity Amount

Let’s get to know how much money you will receive as Gratuity. Assuming you are eligible to get Gratuity funds. Let’s do the calculation.

Let’s say you worked in a company for 5 years and your last take home salary was Rs 35,000 which includes your basic and DA. You gratuity amount payable to you is Rs 1,00,962

Here is the formula to calculate your Gratuity Amount

Gratuity Amount = Your last drawn salary * (15/26)* Number of years worked in a company 

Example your last drawn salary is Rs 35000* (15/26)* 5 years you worked in a company 

You will get gratuity amount as 100962

Gratuity Amount = Rs 35000* (15/26)* 5 = 100962

Is Gratuity Part of CTC in Accenture

Is Gratuity Part of CTC in Accenture? No matter which company you work for, Accenture, Cognizant or any registered company for that matter your gratuity is not part of ctc.

Important FAQ’s

Is Gratuity part of CTC?

Gratuity is not a part of CTC. Gratuity is calculated separately from your monthly salary.

Eligibility Criteria for Receiving Gratuity?

One of the eligibility criteria for receiving gratuity amount is You as an employee required to work minimum 5 Years in a company.

Is Gratuity Amount Taxable?

Income tax Exemption on gratuity amount is 20 Lakh INR.

Conclusion

I hope you got an answer to Is Gratuity part of CTC. Gratuity is not a part of ctc. It’s always calculated separately from your monthly salary. It’s a gift amount and its not part of your PF Provident fund. You are required to complete a minimum of 5 years in a company to receive a Gratuity amount in your bank account. Is Gratuity Amount Taxable – income tax Exemption on gratuity amount is 20 Lakh INR. Sample Data for Excel Practice

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