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How to show gratuity in your ITR?

October 6, 2026

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If you received a gratuity payout, you need to report the full amount in your ITR, even the tax-exempt portion, and correctly claim the exemption so you're not taxed on money that is not actually taxable. Getting these right matters for two reasons: it avoids paying unnecessary tax, and it prevents your gratuity amount from mismatching what your employer and bank have already reported to the tax department.

What documents do you need before you start?

Form 16 (Part B): Your employer usually shows the exempt and taxable portions of your gratuity here.
Gratuity statement: A document from HR detailing your years of service and the calculation used.
Annual Information Statement: Check this on the income tax e-filing portal to confirm the gratuity figure your employer has reported matches what you are about to file.

Where do you report gratuity in ITR-1 or ITR-2?

Most salaried individuals use ITR-1 (Sahaj) or ITR-2. Reporting gratuity has two parts: the gross amount and the exempt portion.

Step 1: Report the gross amount.
In the "Income from Salary" section, under "Gross Salary," report the total gratuity received (taxable plus exempt). If your employer has already reflected this in your Form 16, it may appear pre-filled, but cross-verify it against your gratuity statement.
Step 2: Claim the exemption under Section 10(10).
Below the gross salary section, there's a field for allowances exempt under Section 10. Select Section 10(10) and enter your exempt amount, up to ₹20 lakh for private-sector employees, or the full amount for government employees. The portal deducts this from your gross salary, leaving only the taxable portion added to your total income.

Do you still need to report the exempt portion?

Yes. Even though it is tax-free, you must disclose it under Schedule EI (Exempt Income), usually under "Others" or an item specifically for exemptions under Section 10. This tells the tax department you received the amount and that it is legally non-taxable, rather than leaving an unexplained gap.

What if the taxable portion pushes you into a higher tax bracket?

If part of your gratuity is taxable and it pushes you into a higher slab for that year, you may be able to claim relief under Section 89(1) (Section 157(1) under the Income-tax Act, 2025, where applicable). This effectively spreads the taxable gratuity across the years you actually earned it, which can lower your effective tax rate.

To claim this, you generally need to file Form 10E on the income tax portal. Once filed, enter the relief amount in the "Tax Relief" section of your ITR.

Quick reference: Gratuity in your ITR

Action	Where	Why
Report gross amount	Salary Schedule	Shows the total inflow
Claim exemption	Section 10(10) field	Reduces taxable income by up to ₹20 lakh
Disclose exempt portion	Schedule EI	Mandatory even for tax-free income
Claim relief on taxable excess	Form 10E, then Tax Relief section	Can lower tax on the amount above ₹20 lakh

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Frequently asked questions

What if my employer did not show the exemption in Form 16?

You can still claim it yourself. As long as you were eligible (generally 5 years of service, with exceptions for death or disability), you can manually enter the exempt amount under Section 10(10) while filing your ITR, even if it's missing from your Form 16.

Is it mandatory to disclose exempt gratuity in my ITR?

Yes. Even a fully tax-free gratuity needs to be shown in Schedule EI. Undisclosed large inflows can trigger a mismatch query from the tax department.

Which ITR form should I use for gratuity?

ITR-1 generally works for salaried individuals with no other complex income. If you also have capital gains in the same year, use ITR-2.

How do I calculate my exempt gratuity amount?

The exempt amount is the least of, the actual gratuity received, ₹20 lakh, or a formula based on your last drawn salary and years of service. Most ITR portals require you to calculate and enter this figure yourself.

Can I file after the July 31 deadline?

Yes, as a belated return, though you may lose certain benefits and pay a late fee (up to ₹5,000, or a lower amount if your total income is below the applicable threshold).

My gratuity is ₹25 lakh. How do I split it?

Report ₹20 lakh (the exempt portion) in Schedule EI and the remaining ₹5 lakh (the taxable portion) in the Salary Schedule.

Does the new tax regime change where I report gratuity?

No. The Section 10(10) and Schedule EI fields work the same way under both the old and new tax regimes.

What happens if I don't file Form 10E but claim Section 89 relief anyway?

The relief is typically disallowed, and you'd be required to pay tax as if the entire taxable gratuity was earned in a single year.

Can I fix a mistake after filing?

Yes, you can file a revised return under Section 139(5) within the timeline allowed for the relevant assessment year, generally before the end of that assessment year.

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