Gratuity amount excess the exemption limit

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If you've received a gratuity payment that's higher than the exemption limit set by the Payment of Gratuity Act, 1972, you might wonder about tax relief. While the excess amount over the standard 15 days per year isn't directly eligible for relief under Section 89(1) in the same way as superannuation, tax exemption is calculated based on the least of three factors: your last salary multiplied by years of service and 15/26, the Rs. 20 lakh limit, or the actual gratuity received.

Nitesh Maheshwari

Nitesh Maheshwari (Querist)
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11 September 2021 Dear Sir ,
A person received Gratuity amount more then exemption limit of payment under gratuity act 1972 i.e 15 days of every year ,
company has paid 20 days per year gratuity
can excess amount over and above the exemption we claim relief us 89 (1) .

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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12 September 2021 No. The maximum exemption allowed u/s. 10(10) of Rs. 20 lakhs, can only be claimed on superannuation.

Nitesh Maheshwari

Nitesh Maheshwari (Querist)
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16 September 2021 A person received Gratuity amount more then exemption limit of payment under gratuity act 1972 i.e 15 days of every year , company has paid 20 days per year gratuity can excess amount over and above the exemption we claim relief us 89 (1) .

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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16 September 2021 The least of the following is exempt from tax:

1. Last salary (basic + DA)* number of years of employment* 15/26;
2. Rs. 20 lakhs (which has been hiked from Rs. 10 Lakh as per the amendment);
3. Gratuity Actually received.
Based on changing data, verify among these 3 options, and claim whichever is least.

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