Comments on: Tax treatment of Gratuity under the Income Tax Act, 1961

By: param vashist

param vashist — Fri, 16 Dec 2011 07:40:34 +0000

if Gratuity is including in our CTC salary then company will liable to pay gratuity at the time of left the company or not.

By: K.Kalingarajan

K.Kalingarajan — Fri, 04 Nov 2011 11:12:10 +0000

Sir, I have working in 8 years company, now I will married coming January 2012, the company give the gratuity amount Rs.166665/- (my salary per month 20000/-)and my work continue the company. My gratuity amount is less than 3.5 lakh, this amount exempted or not, if taxable, How do calculate the gratuity amount for income tax purpose? Please guide in my e-mail ID

By: dr rajan

dr rajan — Tue, 07 Jun 2011 14:56:17 +0000

QUESTION: I am a pensioner from punjab State Government. I retired in jan 2008 receiving an amount of Rs. 3.5 lakh as gratuity. But I received a further amount of Rs.four lakhs in December 2010 consequent on revision of pay. At the time of my retirement the exemption limit was Rs. 3.5 lakh. is this arrear tax able in assesment yr 2011-2012

By: Brijmohan Bhatia

Brijmohan Bhatia — Wed, 18 May 2011 10:52:20 +0000

Dear Sir,
I have retired from bank in AUG’2007 Got gratuity Rs.3.67 Paid Tax on Rs 17000/- Now in 2010 Due to salary revision I got Difference of Gratuity as Rs 1.57 IS it taxable or not please guide

By: RAJESH SINHA

RAJESH SINHA — Fri, 08 Apr 2011 12:23:51 +0000

Sir, Here you have mentioned that for Gratuity calculation following salary part will taken under consideration i.e.
BASIC + DEARNESS ALLOWANCE

But, i would like to know that if any employee is getting his salary in below format then on which amount his Gratuity will be calculated……..
BASIC SALARY
HOUSE RENT ALLOWANCE
CONVEYANCE ALLOWANCE

please reply on my e.mail id- rajeshsinha2000@yahoo.com

By: Raghu

Raghu — Mon, 21 Mar 2011 08:06:01 +0000

Once you completed the 5 years of service, then only you can eligible to get a gratuity amount.

By: Manish

Manish — Thu, 17 Mar 2011 08:27:43 +0000

I have completed 4 years 7 months in an arganisation, will i get the gratuity.

By: sukhminder

sukhminder — Sun, 06 Mar 2011 12:04:11 +0000

Can company is liable to pay gratuity on expires of an employee before is completion of 5 years of services.

By: P.K.SHARMA

P.K.SHARMA — Sat, 05 Mar 2011 06:28:05 +0000

DEAR SIRS- MAY ANY EMPLOYER STOP GRATUITY , IN CASE OF VICTIMISED COMPULSORY RETIRMENT ON GROUNDS OF MEDICAL LEAVES(PROPERLY SANCTIONED BY COMPETANT AUTHORITY.)???

By: Roxana

Roxana — Sat, 08 Jan 2011 12:37:11 +0000

Would like to know whether Gratuity is payable to Private School Teachers serving in the state of Maharashtra and Gujarat.

By: Roxana

Roxana — Sat, 08 Jan 2011 12:35:38 +0000

Are the Private School Teachers liable to be paid Gratuity on retirement.

By: Jitendra N Vairagade

Jitendra N Vairagade — Fri, 07 Jan 2011 05:47:19 +0000

Dear Sir,

My mother retired from state government service (Maharashtra State). She received gratuity of 2.3 Lakh, is this gratuity taxable?

Also if we sell the pension (1/3) then whatever the amount received is it taxable?

Please reply.

Thanks & Regards

Jitendra Vairagade

By: bhagwati prasad

bhagwati prasad — Wed, 05 Jan 2011 05:37:35 +0000

SIR, WHAT IS THE LATEST TAXABLE LIMT IN GRATUITY PAYMENT NOW? PLS.GUIDE ME WITH LATEST VERSION.AND FROM WHERE CAN I DOWNLOAD THE LATEST CIRCULAR?

By: KETUL PATEL

KETUL PATEL — Fri, 17 Dec 2010 16:21:22 +0000

SIR, WHAT IS THE LATEST TAXABLE LIMT IN GRATUITY PAYMENT NOW? PLS.GUIDE ME WITH LATEST VERSION.AND FROM WHERE CAN I DOWNLOAD THE LATEST CIRCULAR?

By: Sachin Wakchaure

Sachin Wakchaure — Mon, 13 Dec 2010 12:31:32 +0000

One of my friends was asked to resign after completing 3 years in private company.

He was asked to resign otherwise, he would be terminated from service as his performance was not upto the mark.

Now my question is that instead of resigning from services if anybody was terminated by company, then is company is liable to pay Gratuity.

By: sheba

sheba — Sun, 03 Oct 2010 06:03:05 +0000

i have worked in mahastra as teacher for 12 years during 1958 to 1972. Am i eligible for pension from Maharashtra .

By: Deepak Jain

Deepak Jain — Sat, 11 Sep 2010 19:56:01 +0000

My employer(Haier Appliances Pvt.Ltd.) is deducting Gratuity in advance from my salary Package, shall i am eligible to get this gratuity, if i leave organization with in 1 year

Thanks

By: S.P. Somani

S.P. Somani — Thu, 12 Aug 2010 11:36:51 +0000

I was retired on 31/5/10 and a payment of Rs.1198065 received on 8/8/09 from a limted company (MNC) vide cheque dated 30/7/10.
Pl. advise me for Income tax on applicable on the above payment.
Thanks.

By: M VENKATARAO

M VENKATARAO — Tue, 10 Aug 2010 11:59:30 +0000

Ceiling limit of Gratuity payment of 10.0 lakhs from01-01-2006

By: M VENKATARAO

M VENKATARAO — Tue, 10 Aug 2010 11:55:00 +0000

What is gratuity? why it should be paid? when it should be paid? To whom it should be paid?
These are basic questions and the answer may be like this
Gratuity is an amount paid as a sort of relief to the employees at the time of separation (with 5 years minimum service) for the loyal service rendered to the employer.
The incomtax is payable on the gratuity paid which is more than 3.50 lakhs. why this limit is imposed in IT rules, may be Govt might have thought the limit of gratuity is 3.50 lakhs as per V th. Pay commission scales and the 2nd and most important is that the private sector employees may get the final payments (in collusion with employers) in the name of gratuity so that they may evade the IT from their earnings otherwise there should not be any limit on gratuity amount for exemption for IT calculations.
Once the Govt has increased the limit of Gratuity to 10.0lakhs and allowed to Govt employees it should be allowed to all employees with same effective date ie.01-01-2006.If this same limit and effective date is not same as govt employees will it not be violation of fundamental rules? Why the Govt employees are different for getting income tax exemptions from other citizens of India ?
The limit of payment of gratuity is approved by GOI only
Are the other sector employees different from enjoying the fundamental rights/rules? Perks may be different to different organisations like Govt. employees , private sector employees and PSU Company employees but income computation should be same for paying income tax for all the employees since IT is calculated on total income of a citizen why disparity? There may not be an answer.
Is Govt employee’s gratuity differs for income calculations from the employees of pvt/PSU sectors? Is the gratuity rule is different to Govt.employees
The GOI has approved the pay revision for PSU company employees in Sept 2009 which are effective from 01-01-2007 and the gratuity limit was also increased from 3.50 lakhs to 10.0 lakhs.and its effective date is also from 01-01-2007. but the arrears are paid in 2009 ( at least Govt did not deny the payment of arrears of salary revision thanks a lot)
It is very much surprising that the GOI has approved the ceiling limit of gratuity payment of 10 lakhs wef 24-05-2010 only depriving thousands of retired employees /senior citizens from getting benefit of this gratuity payment ceiling revision for IT calculations. What sin these employees have done? What is the wrong with these retired employees? God only knows
Why so disparity
Is the GOI wants this incometax money from the retired employees only,how much this amounts in the total revenue of IT department?

We the most PSU employees have to live /survive on the terminal benefits only since we are not pensioners like GOVT. SECTOR EMPLOYEES. I request the various people/associations,/Organisations to see the welfare of the old retired PSU/Private Sector employees and represent to the GOI and get the relief of gratuity limit of 10.0 lakhs exemption from 01-01-06 to avoid disparity among the Govt. employees and PSU/private sector employees and also a common rule shall prevail for all citizens of India for calculating the income Tax

By: k v varghese

k v varghese — Fri, 23 Jul 2010 12:36:57 +0000

Sir I am retired form pvt school from 30th Apr 2010. Am I eligible for the enhanced benefit of gratuity from 3.5 lakh to 10 lakh. Kindly give replay as i retired one day before date qwhich the school is taking into effect.

By: Ashok Desai

Ashok Desai — Sun, 11 Jul 2010 08:01:58 +0000

I retired from LIC of India on31st March,2010.Kindly let me know whether my retirement benefits which i received on 1st April,2010 is income for the year 2009/10 or 2010/2011.Also Income Tax is payable at the rate of 2009-10 or 2010-11 income year.Thanks

By: Zephyrine Goveas

Zephyrine Goveas — Mon, 05 Jul 2010 04:58:56 +0000

One fails to understand why there should be any ambiguity regarding tax liability on enhanced gratuity for PSU employees who got the enhanced gratuity w.e.f. 1.1.2007. The concerned clause under clause 4 of Gratuity Act 1972 stands amended and the limit has been raised to 10 lakhs. Tax treatment is covered under Income Tax Act clause 10(10)(ii) wherein gratuity payment under the 1972 Act is exempt from calculation of previous year’s income. Therefore, why can’t Tax Guru take a clear cut stand on this and why the PSU managements who deducted tax at source give the benefit of tax exemption in Form 16 to file refund claim in the tax return for the year 2009-10.

By: Haresh

Haresh — Tue, 29 Jun 2010 05:08:50 +0000

I WAS WORKING LAST 18 YEARS IN A PARTNERSHIP FIRM., BUT P.F. IS NOT DEDUCTED BY FIRM.

BUT, IF I LEAVE THE JOB THAN GRATUITY HOW WILL CALCULATE.

I WAS HEARED GRATUITY WILL CALCULATE = LAST SALARY X NO. OF YEARS

By: p k gupta

p k gupta — Fri, 18 Jun 2010 14:18:22 +0000

whether income tax on death cum retirement gratuity payable to U.P. Govt. under taking i.e. U.P.Power Corporation Ltd. on 01.01.2010 above Rs. 3.50 Lacs is payable

By: pannu deshmukh

pannu deshmukh — Thu, 10 Jun 2010 08:11:21 +0000

what is effective date for exemption upto Rs. 10000\-under Income Tax when we pay gratuity amount to the employee.

By: MRS UNMESHA SHRIKHANDE

MRS UNMESHA SHRIKHANDE — Tue, 08 Jun 2010 12:52:07 +0000

I would like to invite your kind attention that I have submitted duly endorsed necessary application along with necessary claim form for gratuity payment to the Principal Mont Fort Sr. Secondary School Kamrith village Ballarpur as I have worked in this school as a science teacher .
That I have joined the Mont Fort Sr. Secondary School Kamrith village Ballarpur July 1995,and got confirmation of services on 1st June 1997. I have resigned on 15-04-2009 from the services of the school for my personal reason. That I have rendered 12 years confirmed services to the organization .
As per the Gratuity Payment act 1972/ 2009 I am eligible for the payment of gratuity from the organization. Under this act government of India has already made provision for gratuity to all the employees serving in the establishment.
Kindly suggest How I shall get my Gratuity Payment .As 2010 again Gratuity amendment also passed and private school teacher are all ready covered under the definition of ‘employee’ earlier it was not in the act.

pl. reply.

By: M V R Sudhakar Rao

M V R Sudhakar Rao — Mon, 07 Jun 2010 11:10:52 +0000

I am a member of this forum.
Dear Friend
Our is a R& D organisation under the administrative control of Ministry of Commerce and Industry, Govt of India. We are eligible on retirement a gratuity as per our organisation rules which is one month salary for every completed year of service subject to a maximum of 16 half months salary Or as per gratuity act which ever is beneficial to the employee.
My colleague retired on 30 April 2010. His gratuity due has not yet been paid.
Now if his gratuity is to be settled as per gratuity act or other wise (i.e., subsequent to 24 May 2010), while computing tax liability, whether the enhanced gratuity exemption limit of Rs 10.00 lakhs can be allowed.
Kindly provide the guide lines on this issue.
Regards
M V R Sudhakar Rao

By: sk gandhi

sk gandhi — Sat, 05 Jun 2010 10:29:28 +0000

i retired in march 2009 after serving 36yrs in one of the nav ratana PSU.am i get revised gratuity.

By: S. Ramdass

S. Ramdass — Fri, 04 Jun 2010 15:02:54 +0000

The amendment has been made effect only from 24-5-2010 whereas the 6th Pay Commission recommendations were implemented in Central PSUs. and in few State PSUs wef 1-1-07. According to the amendment, the benefit of high amount of gratuity will not be entitled for those who retired upto 23-4-2010? Is it correct and is it justice?

By: K UDAYANANDAN

K UDAYANANDAN — Fri, 04 Jun 2010 11:39:30 +0000

IT exemption limit granted by the Govt. on enhanced gratuity up to Rs.10.00 lacs is made effective from 24-05-10 only whereas the Gratuity Ceiling has been increased from Rs.3.50 lacs to Rs.10.00 lacs w.e.f. 01-01-2007 in case of PSU employees. In this case, employees retired upto April ’10 will not be eligible for the tax relief and the employees retired from May ’10 onwards are eligible for the tax relief. This is not a fair dealing and needs revision to give relief to all employees retired from 01-01-2007 onwards.

By: CA Sandeep Kanoi

CA Sandeep Kanoi — Fri, 28 May 2010 11:15:24 +0000

In My opinion maximum exempt amount will be 3.50 Lakh as act come into force from 24.05.2010

By: m.c.agrawal

m.c.agrawal — Fri, 28 May 2010 11:09:05 +0000

The gratuity amendment act 2010 is made effective from 24.05.2010 where by gratuity to psu and pvt sector employees is enhanced from rs 3.50 lac to rs.10 lac…suppose i receive gratuity rs 6.05 lac in sept 2009…what amount will be exempted from income tax during financial year 2009-10.pls clarify…
m c agrawal

By: Ajit Kr singh from Ranchi

Ajit Kr singh from Ranchi — Thu, 20 May 2010 15:19:36 +0000

Gratuity is exempt from Income tax upto Rs. 3.50 lakh. If an employees has received 10 lakh his balance amount of Rs. 6.5 lakh is taxable along with other income under the head salary.

By: leena

leena — Tue, 18 May 2010 09:16:41 +0000

So if a govt employee receives gratuity to the tune of Rs.10 lacs, then is it fully exempt?? or does it mean they can be paid upto 10 lacs ? kindly clarify..thanx in advance.

By: T K Ghosh

T K Ghosh — Thu, 13 May 2010 06:35:03 +0000

Worked in a Private company for 30 years and got gratuity amount more than the amount exempted under Income Tax Act. Is Tax payable on the balance amount i.e. on Received amount (-) exempted amount or on receivable amount?

By: bindu

bindu — Fri, 07 May 2010 07:59:53 +0000

I have completed 4 years 10 months and serving notice period in a private company. Will i be eligible for Gratuity. I will be completing 5 years shortly. Help me.

By: ravi nagpal

ravi nagpal — Tue, 04 May 2010 06:59:30 +0000

I have retired from PSU in dec 2007. At time of retirement I have received gratuaty of Rs 3,50,000/- After that from Govt of India declaration that gratuaty amount is increased to Rs 10,00,000. from Jan 2007 onwords.mr gratuity was calculated to rs 550000/-
Am I suppose to receive additional amount of Rs 200,000 as gratuaty with Tax or without Tax from the company

By: Gopalan

Gopalan — Wed, 28 Apr 2010 07:22:10 +0000

A bill has been introduced recently in Parliament to amend the Payment of Gratuity Act 1972 to raise the ceiling amount from 3.5 to 10.00 Lakhs. As the cabinet has already approved the enhancement will it not be possible for Finance Ministry/Department of Direct Taxes to issue Exemption Notification for Incometax exemption upto 10.00 Lakhs for Gratiuty payment received by retired employees.

By: P.S. Rao

P.S. Rao — Thu, 08 Apr 2010 11:29:53 +0000

R/sir,I have retired from M.P. State Electricity Board in November 2009. At time of retirement I have received DCRG of Rs 6,87,000/-.

As per Gratuity act the amount of Rs. 3.5 lakhs is tax free whether the govt. enhanced the ceiling of Rs.10.00 lacks fully income tax free. If excempted please sent relevent documents
Read more: http://www.taxguru.in/income-tax/tax-treatment-of-gratuity-under-the-income-tax-act-1961.html#ixzz0kVSWwvAm

By: rajendra mahadeo tamhankar

rajendra mahadeo tamhankar — Mon, 05 Apr 2010 08:17:02 +0000

I have retired from PSU in Augest 2007. At time of retirement I have received gratuaty of Rs 3,50,000/- After that from Govt of India declaration that gratuaty amount is increased to Rs 10,00,000. from Jan 2007 onwords.
Am I suppose to receive additional amount of Rs 6,50,000 as gratuaty with Tax or without Tax from the company.

By: Mahesh Singh

Mahesh Singh — Fri, 02 Apr 2010 05:36:43 +0000

Dear Sir,
I have one question if any person withdrawing basic salary Rs. 50,000/- (at the time of retirement) and no. of year worked is 30 years in pvt or ltd company then as i understand gratuity calculation is 50,000 * 15/26*30= 8,65,384/- this calculation is correct?? or any maximum cap is there of no. of year of maximum amount of gratuity (i am not taking about tax exempt)
Pls. explain
Thanks Sir

By: m c agrawal

m c agrawal — Fri, 26 Mar 2010 00:44:02 +0000

whether the gratuity ceiling raised from rs. 3.50 lac to rs. 10.00 lac is applicable to the PSU bank employees also and if yes,then what will be the date of effect of it.As i opted VRS in september 2009 whether i m entitled for revised gratuity or not?.pls clarify.
M.C.Agrawal

By: m c agrawal

m c agrawal — Fri, 26 Mar 2010 00:41:46 +0000

whether the gratuity ceiling raised from rs. 3.50 lac to rs. 10.00 lac is applicable to the employees also and if yes,then what will be the date of effect of it.As i opted VRS in september 2009 whether i m entitled for revised gratuity or not?.pls clarify.
M.C.Agrawal

By: R K AGARWAL

R K AGARWAL — Tue, 09 Mar 2010 06:53:42 +0000

I understand that Any Gratuity Payable under the Gratuity Act 1972 ( Present Limit 3.5 lakhs ) is TAXfree under the Income Tax act. Is it correct?
Once Gratuity act is amended to enhance the Maximum Payable to Rs 10 Lakhs, is there a ned to amend Income tax act for increasing Tax exemption limit on Gratuyity also?

By: m c agrawal

m c agrawal — Tue, 02 Mar 2010 15:05:55 +0000

pls February 9th, 2010 at 5:45 pm
sir i have opted vrs from a public sector bank and was paid gratuity to the tune of rs.3.94 lac after 30 yrs and 11 months service.pls let me know the amount of gratuity exempted under income tax act and whether additional gratuity is payable to me since i am expecting the ceiling of gratuity to be revised tfrom rs 3.50 lac to rs 10 lac too public sector employees also. pls clarify.

as below:

By: B.SEKAR

B.SEKAR — Wed, 24 Feb 2010 11:39:48 +0000

sir,
In recent note, that provison created for payment of gratuity will not considered at exp for IT purpose, provided if it is paid within the year itself. I hope it is correct. : then some companies are paying premium to LIC, as against their liability “group Gratuity cash accumalation scheme, will it be taken as expenses by the company, as the premium is paidon due date: this can be clarified tome please.

By: CA Sandeep Kanoi

CA Sandeep Kanoi — Sat, 20 Feb 2010 05:47:39 +0000

Taxable if gratuity received to legal heir of the employees who die while he was not in active service.

By: aanea mohta

aanea mohta — Sat, 20 Feb 2010 04:21:32 +0000

You say in one para ” Gratuity payment to a widow or other legal heirs of any employee who dies in active service shall be exempt from income tax.”
In the next to next para you say ” gratuity received by the legal heir is taxable under the head” Income from Other Sources”. HOW ? PL EXPLAIN