Calculate the exact tax exemption and taxable portion of your gratuity amount based on your employment type and service years — completely free.
| Component | Amount |
|---|---|
| Basic + DA salary | ₹50,000 |
| Service years (rounded) | 0 years |
| Formula (÷26) | ₹50,000 × 15 × 0 ÷ 26 |
| Gross gratuity | ₹0 |
| Tax-free exemption | ₹0 |
| Taxable gratuity | ₹0 |
| ✅ Net gratuity (after tax) | ₹0 |
Gratuity is partially or fully exempt from income tax under Section 10(10). Government employees get full exemption. Private sector employees covered under the Gratuity Act are exempt up to ₹20 lakh or the formula amount, whichever is lower.
The maximum tax-exempt gratuity for private sector employees is ₹20,00,000 (₹20 lakh). Government employees have no upper limit — their entire gratuity is tax-free.
For Act-covered employees, the exempt amount is the minimum of actual gratuity received, ₹20 lakh, and (Last salary × 15 × Years of service) ÷ 26. Any amount above this minimum is taxable.
Yes, the ₹20 lakh lifetime exemption limit for gratuity is cumulative across all employers. If you have already claimed exemption on gratuity from a previous employer, the remaining limit is reduced accordingly.
Gratuity is taxed in the financial year in which it is received. If a large gratuity makes your total income cross a higher slab in that year, the taxable portion is taxed at the higher rate.