A Gratuity Exemption Calculator For You !

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Section 10(10) of the Income Tax Act lays down the quantum of exemption granted on the amount of gratuity received by a tax payer from his /her employer. The provision differentiate among three broad category of employees. While the gratuity received by central and state government is fully exempt if it is received on death or retirement, in case of private employees who are governed under Payment of Gratuity Act 1972 gets exemption  to the extent of least of

1. Rs 10,00,000
2. 15 days salary (out of 26 days) based on laast drawn salary for each completed  years of service or part of the year in excess of 6 months or
3. actual gratuity received

For others,least of following

1. Rs 10,00,000
2. Half months salary  on the basis of last 10 months average  salary for each completed year of service
3. actual gratuity received

For the purpose of easiness, a calculator to  compute exemption of gratuity amount received at the time of retirement or death is built. Readers are requested to report the error found by them

Please note that gratuity received during service period is always taxable.