Gratuity received - tax exempt or not

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 August 2015 Actually I resigned from the company last year October 31st 2014 after completion of 15 years of Service. I have received the gratuity amount of Rs. 149050/- during December 2014.

Whether I can claim Exemption as per Income tax rules or to pay tax? Kindly advice in this matter. Because I am filing the return today. Only 6 days left.

S. Venkatesh
8199952148

Querist : Anonymous

Querist : Anonymous (Querist)

25 August 2015 Please let me know the status. I am waiting for the answer

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

26 July 2024 Based on the details provided, you can determine whether your gratuity amount is taxable or exempt using the following guidelines from the Income Tax Act, 1961:

### **Exemption Rules for Gratuity**

1. **Gratuity Limit under Income Tax Act:**

- **Section 10(10)(ii)** of the Income Tax Act provides for the exemption of gratuity received. For employees of any public sector undertaking (PSU) or a government organization, the exemption limit is up to ₹10 lakh.
- Any gratuity received in excess of ₹10 lakh is taxable.

2. **Specific Case for Your Gratuity Receipt:**

- You mentioned that you received ₹1,49,050 as gratuity. Since this amount is well below ₹10 lakh, it falls within the exemption limit.

### **Conclusion for Your Case:**

- **Exempt Amount:** The entire gratuity amount of ₹1,49,050 is exempt from tax because it is below the ₹10 lakh exemption limit as per **Section 10(10)(ii)** of the Income Tax Act.

### **Filing Your Tax Return:**

1. **Claiming Exemption:**
- When filing your income tax return, you should claim the entire amount of ₹1,49,050 as exempt under **Section 10(10)(ii)**.

2. **Filing Process:**
- Report the gratuity amount received under the appropriate section for exempt income.
- Ensure you mention the exempt amount correctly in your tax return form to avoid any confusion.

### **Steps for Filing the Return:**

1. **In the Income Tax Return Form:**
- In **ITR-1** or **ITR-2** (depending on your situation), locate the section for exempt income.
- Enter the gratuity amount of ₹1,49,050 as exempt from tax.

2. **Documentation:**
- Keep records of the gratuity receipt and any communication or documentation from your employer confirming the amount and payment date for your records and in case of any future queries.

By following these guidelines, you can accurately report your gratuity and claim the exemption, ensuring your tax return is filed correctly.

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