What is the formula for tax-exempt gratuity in India?

For employees covered under the Payment of Gratuity Act, the formula is (15 × last drawn salary × years of service) / 26. For uncovered employees, the formula is (1/2 × average salary × years of service).

What is the maximum tax exemption limit for gratuity?

The statutory limit for tax-exempt gratuity is ₹20 lakh. Any gratuity received above this amount (or the formula-calculated amount) is added to your taxable income and taxed at slab rates.

Gratuity Tax Exemption CalculatorFY 2026-27

Calculate exact tax-free Gratuity based on 15/26 formula and max ₹20L statutory limit.

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Quick Summary: Gratuity Tax Exemption Calculator

Gratuity received by an employee is tax-exempt up to the lower of: 1) Actual gratuity received, 2) Statutory limit of ₹20 Lakh, or 3) Formula-based amount (15 days' salary for every completed year of service). This tool automates the math for both covered and non-covered employees under the Payment of Gratuity Act.

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Regulatory Disclaimer · FY 2026-27

Last verified May 2026

Statutory Disclosure

Nature:Calculator platform and is NOT a SEBI-registered Investment Adviser. All calculations are indicative.

Risk:"Investments in securities market are subject to market risks. Read all related documents carefully before investing."

Consult a SEBI-registered IA or CA for personalised advice.

9 out of 10 traders in F&O incurred net losses (SEBI 2023). Tax estimates based on IT Act 2025. Trezoriq is not liable for financial decisions based on results.