Gratuity received by a government employee at the time of retirement or when you have resinged from the organisation, will not attract any tax. The employee can receive a maximum amount of 20 lakh as gratuity. As per the Payment of Gratuity Act, 1972 and Section 10 (10) (iii) of the Income Tax Act, 1961 up to 20 lakh gratuity received for non-government employee is exempt from tax.