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Taxable Gratuity Calculator

Calculate Taxable amount of Gratuity paid to Government employees or other employees covered under Gratuity Act 1972 or not covered under Gratuity Act 1972 as per the provisions of Indian Income Tax Act / Rules

Are you a Govt. / Local Authority Employee ?
Gratuity amount received
Are you covered under Payment of Gratuity Act 1972 ?
Is your establishment seasonal?
Salary for the last month
Completed years of service
Gratuity Amount as per Gratuity Act 1972
MonthBasic PayDA%ge commission based on turnoverTotal Salary';
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Total Salary for 10 months
Average Salary for 10 months
Average Monthly salary for 10 months immediately preceding the MONTH (not the day) of retirement
Completed years of service
Gratuity Amount as per Gratuity formula
Gratuity amount exempted from tax
Taxable Amount of Gratuity

Provisions relating to taxability of gratuity

  1. Gratuity received by Government employees and employees of local authority [Section 10(10)(i)] - In case of a Government employee, any death-cum-retirement gratuity received is wholly exempt under Section 10(10)(i). It should be noted that employees of statutory corporation will not fall under this category.
  2. Gratuity received by non-Government employees : This category will further be classified as follows :
    1. Exemption in respect of gratuity in case of employees covered by the Payment of Gratuity Act, 1972. [Section 10(10)(ii)]

      Exemption in this case will be lower of the following amounts :

      1. 15/26 (*) days' last drawn salary (**) x years of service (^)
      2. Maximum amount specified by the Central Government, i.e., ₹ 20,00,000.
      3. Gratuity actually received.

        (*) 7 days in case of employee of seasonal establishment.
        (**) Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite.
        (^) The formula is based on the 15 days of last drawn salary for each completed year of service or part thereof in excess of six months. If an employee has worked for 20 years 7 months, the years of service will be taken as 21. However, if an employee has worked for 20 years 5 months, the years of service will be taken as 20.

    2. Exemption in respect of gratuity in case of employees not covered by the Payment of Gratuity Act, 1972. [Section 10(10)(ii)]

      Exemption in respect of gratuity will be least of the following :

      1. Half month's average salary for each completed year of service, i.e.,

        [ Average monthly salary (**) x ½ ] x Completed years of service (^^).

      2. Maximum amount specified by the Central Government, i.e., ₹ 20,00,000
      3. Gratuity actually received.

        (**) Average monthly salary is to be computed on the basis of average of salary for 10 months immediately preceding the MONTH (not the day) of retirement. The salary means basic salary, dearness allowance, and commission received on sales.
        (^^) This formula is based on the 15 days of last drawn salary for each completed year of service. If an employee has worked for 20 years 7 months, the years of service will be taken as 20 and not 21.

Updated : Sept 24, 2020
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