Gratuity received by non government employee

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Non-government employees receiving gratuity upon retirement can claim tax exemption in India. The exemption limit depends on whether the employee is covered by the Payment of Gratuity Act, with specific calculations based on years of service and salary. This exemption is available under Section 10(10) of the Income Tax Act, 1961, and applies to both old and new tax regimes. For those not covered by the Act, different calculation rules and a lower exemption limit apply.

afreen shaikh

afreen shaikh (Querist)
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08 September 2025 If any gratuity is received by non government employee at the time of retirement is exempt?? If yes than how much?? Under which sec??

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 September 2025 Yes, if a non-government employee receives gratuity at the time of retirement, it is exempt from tax up to a certain limit under Indian law.
For Non-Government Employees Covered by the Payment of Gratuity Act:
The gratuity exemption is the least of the following:

15 days' salary (basic + DA) for each completed year of service,
The maximum exemption limit, currently ₹20,00,000
Actual gratuity received from the employer

The years of service are rounded to the nearest full year (6 months or more rounds up).
Full exemption applies up to the above limits; any gratuity exceeding the exempted amount is taxable.

This exemption is provided under Section 10(10) of the Income Tax Act, 1961.

afreen shaikh

afreen shaikh (Querist)
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08 September 2025 Company has deducted tds in form 16.... They are showing gratuity of 15lacs but they have not claimed exemption .... In new scheme also it is available.????

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 September 2025 Yes, it is available even in new regime.
For Non-Government Employees Not Covered by the Payment of Gratuity Act:
The exemption is the least of the following:

Half month's average salary (basic + DA) for each completed year of service (average salary is usually calculated on the basis of the last 10 months)

A maximum exemption limit of ₹10,00,000

Actual gratuity received

This applies irrespective of the nature of permanent or temporary employment and applies if the employee has completed 5 years of service with the employer.

afreen shaikh

afreen shaikh (Querist)
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08 September 2025 Gratuity is recd bcz of change of job .... In new scheme in itr2 in exemption list 10(10) is written as death cum retirement gratuity recd .... He has changed job... Which option should I select??

afreen shaikh

afreen shaikh (Querist)
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08 September 2025 Should I show under 10(10c) amount received on voluntary retirement or termination of service???

And employer has even deducted tds on reimbursement of expenses?? How can I reduce it??

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 September 2025 Consider it under voluntary retirement.
For each reimbursement you should have voucher for the relevant expense made.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 September 2025 Good Luck..

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