Gratuity exemption for less than five years of service

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Vishal Morani (Querist)
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15 December 2012 Dear All,

As per the Gratuity Act, gratuity is payable on completion of five years of services, but if employer voluntary pays the garutity on termination or resignation even he works for less than five years.

Will he entitled to claim the exemption under Income Tax, Since in Income Tax act [Section 10(10)iii].there is no condition that five years should be completed.

Vishal

Mohit Naithani

Mohit Naithani (Expert)
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15 December 2012 u r right.

calculate expemtion according to rule prescribe. its immaterial to state the countinous of service is less then 5 years.

Least is exempt :
1. Actual recv
2. Rs 1000000/-
3. 15/26*Last salary drawn*Rounded number of years of Services.

Hari Beldona

Hari Beldona (Expert)
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15 December 2012 Yes, he is entitled to claim exemption provided that he could not complete continues period of five years because of circumstances which are beyond his control say x is incapable to serve in the service after he met with an accident.

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