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Taxable Gratuity

How much of the gratuity you received is exempt under section 10(10), and how much is taxable.

Switch calculator — current: Taxable gratuity

Your income tax

TDS & TCS

Advance tax & late fees

Your details

Fully exempt (Government / local authority)?
Covered by the Payment of Gratuity Act?

Basic + DA

Seasonal establishment?

Seasonal employees use 7/26 instead of 15/26.

Your answer

₹ —

Still needed: the gratuity received.

  • The figure, and how it compares where there is a choice
  • Every step of the working, line by line
  • The exact sections, with links to read them

For guidance only — not tax advice. Every figure is drawn from BharatX’s verified rule book, with the sections and rules shown alongside it.

Taxable gratuity: how it works and FAQs

FY 2025-26 (Income-tax Act 1961) and FY 2026-27 (Income-tax Act 2025) · Updated

How it works

Gratuity you receive is exempt under section 10(10).

Gratuity you receive is exempt under section 10(10). Government / local-authority employees get the whole amount tax-free. For everyone else the exempt amount is the least of: the gratuity received, a ₹20,00,000 statutory cap, and a service-based formula. The rest is taxable.

  1. Fully exempt (Government / local authority) → whole gratuity is exempt.
  2. Covered by the Payment of Gratuity Act → formula = 15/26 × last-drawn monthly salary × completed years of service (7/26 for seasonal establishments).
  3. Not covered → formula = ½ × average monthly salary × years of service.
  4. Exempt = least of (received, ₹20,00,000, formula). Taxable = received − exempt.

Worked example

Exempt ₹5,76,923; taxable ₹9,23,077.

Covered employee, last-drawn salary ₹50,000, 20 years of service, gratuity received ₹15,00,000.

  1. Formula = 15/26 × 50,000 × 20 = ₹5,76,923.
  2. Exempt = min(5,76,923, 20,00,000, 15,00,000) = ₹5,76,923.

Exempt ₹5,76,923; taxable ₹9,23,077.

Frequently asked questions

What is the maximum gratuity exemption?

₹20,00,000 over your lifetime for non-Government employees; Government / local-authority employees are fully exempt.

How are years of service counted?

Completed years. For employees covered by the Gratuity Act, service beyond six months in the last year is rounded up to a full year.

Every figure the calculator shows lists the sections it relies on under “Legal basis”. For guidance only — not tax advice.