Gratuity amount not considered in tax exemption (Form-16)

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An employee's gratuity, paid as ex-gratia due to 4 years and 8 months of service, was not reflected as tax-exempt on their Form-16. Despite requests, the employer has not revised the form. The advice given is to treat the gratuity as tax-exempt when filing the Income Tax Return (ITR) and, if this is not accepted, to pursue an appeal.

Gopala krishna

Gopala krishna (Querist)
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17 September 2021 I have a continuous service of 4 years 8 months in a organisation. During the Full and final settlement employer mentioned the gratuity amount as Ex-gratia, employer confirmed (orally) that as my service was 4 years 8 months, they have paid my Gratuity as Ex-gratia and this amount is also tax exempted.

But, in the Form-16, tax exemption not considered, immediately, I have asked my employer (through mail) to revise the Form-16, but, employer not responding.

Kindly advise,

1) shall I consider my Gratuity amount (which was paid as Ex-gratia) in my tax return

2) if not possible, how can I get my tax exemption.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 September 2021 If an employee worked for 4 years and 8 months, the duration is considered as 5 years of continues service and he is eligible for gratuity.
Inform it to employer the payment should be treated as gratuity and exempt from tax.
Ask your employer to revise form 16 and file ITR.

Gopala krishna

Gopala krishna (Querist)
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17 September 2021 Thank you for your valuable time and reply sir,
If the Employer not revising Form-16, and responding to my emails, shall I consider gratuity amount as tax exempted in ITR during filing.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 September 2021 Consider it as exempt in ITR. If not accepted go for appeal.

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