Gratuity Exemption Calculator
Calculate tax-exempt gratuity amount under Section 10(10) of Income Tax Act.
Calculate Gratuity Exemption
Gratuity Exemption Results
Enter details to calculate exempt gratuity.
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.