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The Economic Times

Personal Finance / The Economic Times

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Gratuity may rise under New Labour Code, but your income tax bill could too

The Code on Social Security, 2020 expands the wage base for gratuity, potentially increasing payouts, but tax rules under the Income-tax Act, 1961 and the Income-tax Act, 2025 still rely on basic pay plus DA. With the Payment of Gratuity Act, 1972 now subsumed, this mismatch could make part of the higher gratuity taxablehighlighting the need for alignment between labour and tax laws.

13 Apr 2026 2:32 pm