What this calculator does
This page helps you estimate the likely result for Gratuity Exemption Calculator from the details entered in the calculator below. Treat the output as a planning estimate, not as a substitute for the final filing computation.
Inputs explained
- Employee Type: Use the figure relevant to your case and keep the unit consistent with the form.
- Gratuity Received: Use the figure relevant to your case and keep the unit consistent with the form.
- Last Drawn Salary (Monthly): Use the figure relevant to your case and keep the unit consistent with the form.
- Years of Service: Use the figure relevant to your case and keep the unit consistent with the form.
- Avg Salary (Last 10 months): Use the figure relevant to your case and keep the unit consistent with the form.
How it works / Method
The calculator uses the values you enter, applies the relevant rule logic for this topic, and updates the result summary immediately after calculation.
Formula or calculation logic
Calculate Gratuity Exemption
Gratuity Exemption Results
Enter details to calculate exempt gratuity.
Step-by-step example
- Enter Employee Type as e.g., 1500000 for a sample case.
- Enter Gratuity Received as e.g., 80000 for a sample case.
- Enter Last Drawn Salary (Monthly) as e.g., 20 for a sample case.
- Click the calculate button and review the Gratuity Exemption Results panel.
Use cases
- Review salary or exemption planning before payroll proof submission.
- Check how changing one salary-related input affects the estimate.
- Prepare a cleaner draft working before filing.
Assumptions & limitations
- Results are estimates only and should be checked against the correct FY and AY rules.
- This page does not validate every exemption condition, document requirement, or edge case.
- Verify the latest filing rules before submitting returns, proofs, or tax payments.
Sources & references
Gratuity Exemption Rules
Government Employees
Private Employees - Covered under Gratuity Act
Private Employees - Not Covered
Key Points
- Minimum Service: Generally 5 years required (waived for death/disability)
- Covered Establishments: Factories, mines, plantations, shops with 10+ employees
- ₹20 Lakh Limit: Increased from ₹10 lakh w.e.f. 29-03-2018
- Available in Both Regimes: Gratuity exemption applies in old and new tax regime
- Death Gratuity: Fully exempt when received by legal heirs
Examples
Last Salary: ₹80,000 | Years: 25 | Gratuity Received: ₹18,00,000
Formula Amount = (15/26) × 80,000 × 25 = ₹11,53,846
Actual Received = ₹18,00,000
Statutory Limit = ₹20,00,000
Exempt: ₹11,53,846 (minimum of 3)
Taxable: ₹6,46,154
FAQs
For private employees, maximum exemption is ₹20 lakh. For government employees, entire gratuity is exempt without any limit.
Establishments with 10 or more employees on any day in the preceding 12 months are covered. Includes factories, mines, oilfields, plantations, ports, railway companies, shops.
Service of 6 months or more is rounded up to the next full year. Example: 19 years 7 months = 20 years for calculation.
Generally yes, but the 5-year requirement is waived in case of death, disablement, or termination due to contraction of business.
Yes, gratuity exemption under Section 10(10) is available in both old and new tax regimes.
Last drawn monthly salary including Basic + DA (if DA is part of retirement benefits). Excludes HRA, bonus, commission, overtime.
15 days' wages for each year of service. 26 is used as divisor (days in a month excluding 4 weekly offs). So (15/26) × monthly salary × years.
Yes, gratuity received by legal heirs/nominees on death of the employee is fully exempt without any monetary limit.