Section 10(10) of the Income Tax Act<\/a> offers tax<\/a> exemption on gratuity received by employees. Gratuity is a lump sum<\/a> payment given to employees after long service. Indian salaried and government employees should know this section.<\/p>\n This guide explains how Section 10(10) works.<\/p>\n Section 10(10) gives tax exemption on gratuity received by:<\/p>\n Different rules apply to each category.<\/p>\n Eligibility:<\/p>\n Government and private sector<\/a> employees both qualify.<\/p>\n The limits depend on employment type:<\/p>\n The maximum tax-free limit is ₹20 lakh.<\/p>\n Section 10(10) matters for three reasons:<\/p>\n A clean Section 10(10) claim saves significant tax.<\/p>\n For employees under Gratuity Act:<\/p>\n Gratuity = (Last drawn salary × 15 × years of service) \/ 26<\/p>\n Where last drawn salary includes basic plus dearness allowance<\/a>.<\/p>\n The exempt amount is the lowest of:<\/p>\n The lowest figure is exempt; rest is taxable.<\/p>\n Eligible categories include:<\/p>\n Each has specific rules.<\/p>\n Gratuity is usually paid after:<\/p>\n Plan your career milestones accordingly.<\/p>\n Section 10(10) offers:<\/p>\n These benefits matter at retirement.<\/p>\n A common method:<\/p>\n Most employers handle calculations.<\/p>\n Keep these handy:<\/p>\n Maintain records.<\/p>\n Filers often:<\/p>\n A clean check avoids these errors.<\/p>\n A few habits help:<\/p>\n For families:<\/p>\n Helps surviving families.<\/p>\n Voluntary retirement gratuity:<\/p>\n Plan retirement carefully.<\/p>\n Suppose you retire after 25 years with last drawn basic plus DA of ₹50,000 per month.<\/p>\n Formula gratuity = (50,000 × 15 × 25) \/ 26 = ₹7,21,154<\/p>\n Actual received (say): ₹7,21,154<\/p>\n ₹20 lakh cap exceeds formula amount<\/p>\n Lowest = ₹7,21,154<\/p>\n This entire amount is tax-free.<\/p>\n Section 10(10) is available under:<\/p>\n This is one of the few exemptions available in both regimes.<\/p>\n If you work with multiple employers in a career:<\/p>\n This cap is cumulative.<\/p>\n To maximise:<\/p>\n A clean plan saves more tax.<\/p>\n Your employer should:<\/p>\n Coordinate with HR.<\/p>\n Salaried filers usually use:<\/p>\n Report gratuity correctly.<\/p>\n The ₹20 lakh cap has been revised in recent budgets. Stay updated for any changes.<\/p>\n The exemption applies to gratuity received as part of:<\/p>\n Not to other types of payments.<\/p>\n Other exemptions to plan alongside:<\/p>\nWhat Is Section 10(10)?<\/h2>\n
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Who Can Claim Section 10(10)?<\/h2>\n
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Exemption Limits<\/h2>\n
Government Employees<\/h3>\n
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Non-Government Employees Under Gratuity Act<\/h3>\n
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Other Non-Government Employees<\/h3>\n
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Why Section 10(10) Matters<\/h2>\n
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How Gratuity Is Calculated<\/h2>\n
How Section 10(10) Exemption Works<\/h2>\n
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Eligible Employees<\/h2>\n
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Service Period<\/h2>\n
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Benefits<\/h2>\n
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How to Claim Section 10(10)<\/h2>\n
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Documents Needed<\/h2>\n
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Common Mistakes<\/h2>\n
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Tips for Better Use<\/h2>\n
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Section 10(10) and Death Gratuity<\/h2>\n
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Section 10(10) and Voluntary Retirement<\/h2>\n
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Section 10(10) Example<\/h2>\n
Section 10(10) and Tax Regime<\/h2>\n
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Section 10(10) and Multiple Employers<\/h2>\n
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Section 10(10) and Tax Planning<\/h2>\n
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Section 10(10) and Form 16<\/h2>\n
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Section 10(10) and ITR Form<\/h2>\n
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Section 10(10) and Future Limit Changes<\/h2>\n
Section 10(10) and Income Other Than Salary<\/h2>\n
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Section 10(10) and Other Retirement Benefits<\/h2>\n