Gratuity Calculator Sri Lanka 2026 — Payment & Tax Estimator

Gratuity in Sri Lanka is a lump-sum statutory payment owed when an employment relationship ends. The entitlement, the formula, and the deadline are all fixed by the Payment of Gratuity Act No. 12 of 1983. The tax treatment is set separately by the Inland Revenue Department. This calculator combines both.

1. Eligibility (Act s.2, s.5)

The Act applies only to employers who employed 15 or more workers on any day during the 12 months before termination. Within that scope, a worker qualifies for gratuity after 5 years of continuous service (Act s.5(2)). The five-year minimum is waived in only one situation — death in service, under the proviso to s.5(2). Below 15 workers, or below five years and not deceased, no statutory entitlement arises.

2. The statutory formula (Act s.5(1))

Section 5(1) splits workers into two categories with different multipliers:

• Monthly-paid: ½ × last month's wage × completed years of service
• Piece, contract or daily-paid: 14 × daily wage × completed years of service, where the daily wage equals the monthly equivalent divided by 30.

The Act refers to completed years; in practice the Department of Labour and the model contracts approved under s.13 use a linear pro-ration for partial years (years + months ÷ 12). This calculator uses the same approach so the result matches the figure HR will quote.

3. Terminal-benefits tax (IRD APIT Table 02)

The Inland Revenue Department treats gratuity as a terminal benefit. Under the Fifth Schedule to the Inland Revenue Act No. 24 of 2017 (as amended), terminal benefits in a year of assessment are taxed under a separate concessionary table — they do not stack with your regular salary's APIT.

• For service up to 20 years: the first Rs 5,000,000 of cumulative terminal benefits in the year is exempt.
• For service exceeding 20 years: the exempt slab rises to Rs 10,000,000.
• On the excess, three concessionary rates apply: the first Rs 1,000,000 at 6%, the next Rs 1,000,000 at 12%, any balance at 18%.

4. Net you take home

Net = gross gratuity − APIT due on this payment. The calculator also accounts for any other terminal benefits you have already received in the same year of assessment, since the exempt slab is shared across all of them. Section 5(3) of the Act sets a hard payment deadline: gratuity must be paid within thirty daysof termination — if it isn't, the worker can file a complaint with the Commissioner of Labour, who can recover the amount as a debt due to the State.

• Payment of Gratuity Act No. 12 of 1983 (full text, Parliament of Sri Lanka)
• Department of Labour — Payment of Gratuity (overview)
• IRD — Advance Personal Income Tax (APIT) tables and circulars
• IRD — Tax Chart for Y/A 2025/26

The formula and tax slabs on this page were last cross-checked against the Act and the IRD's terminal-benefits guidance on 2026-05-12. Payment of Gratuity Act No. 12 of 1983is the controlling statute for the gratuity entitlement itself; the IRD's APIT Table 02 governs the tax treatment.

This page is reviewed every April (start of a new SL year of assessment) and whenever a new Inland Revenue amendment alters the terminal-benefits table.