Gartuity considered for tax

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Vinod Basupattad (Querist)
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02 August 2012 I received gratuity settlement of Rs.94327/- on resignation with a company, my last drawn salary was Rs.49705/-.

The company added back Rs.47164/- out of gratuity to my total income from salary for tax computation.

Please guide me on the provisions of Payment of Gratuity Act 1972 in regard to "How much of gratuity is exempt under income tax"?

Amol S Joglekar

Amol S Joglekar (Expert)
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02 August 2012 1/2 months' salary for every year of completed service. 6 months or above shall be considered to be one year. The amount suggests that you have served for 5 years right?

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Vinod Basupattad

Vinod Basupattad (Querist)
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03 August 2012 Thanks Amol, infact I wanted to understand whether the rules of the Income tax act 1961 states that only 50% of gratuity is exempted and other half is taxed? or are there any other provisions ?

Amol S Joglekar

Amol S Joglekar (Expert)
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05 August 2012 Ther is no such 1/2 way exemption under Income Tax. It has given the rules for gratuity. Please refer to sec 10 for further details.

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