Gratuity could jump under new code but a tax mismatch may cost you money too

Higher gratuity may not mean tax free payout

India’s new Code on Social Security expands the wage base for gratuity, which could raise employee payouts. But tax calculations under both the Income-tax Act, 1961 and the upcoming Income-tax Act, 2025 still hinge on basic pay plus dearness allowance. That gap could make part of the higher gratuity taxable, unless labour and tax rules align.