Gratuity Calculator — Sri Lanka

Under Sri Lanka's Payment of Gratuity Act No. 12 of 1983, an employee with 5 or more years of continuous service is entitled to a gratuity of half a month's salary for every completed year of service.

Example: on a Rs. 200,000 monthly salary with 10 years of service, your gratuity is ½ × 200,000 × 10 = Rs. 1,000,000.

Gratuity is a terminal benefit. Under IRD APIT Table 03, an approved retiring gratuity is tax-free up to Rs. 5,000,000; only the amount above that is taxed, at 12%. Most gratuities fall under the threshold and are received in full.

Frequently asked questions

How is gratuity calculated in Sri Lanka?
Gratuity is half a month's salary for every completed year of service, payable after 5 years, under the Payment of Gratuity Act. On a Rs. 200,000 salary with 10 years of service that is Rs. 1,000,000.

Is gratuity taxed in Sri Lanka?
An approved retiring gratuity is tax-free up to Rs. 5,000,000; only the amount above that is taxed at 12% under IRD APIT Table 03. Most gratuities fall under the threshold and are received in full.

How many years do I need to qualify for gratuity?
You need 5 or more years of continuous service with the same employer to be entitled to gratuity under the Payment of Gratuity Act.