Grautity or leave encahment is payble under income tax

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Vipin Kumar Sharma (Querist)
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25 May 2013 DEAR SIR

I WANT TO KNOW IS GRAUTITY OR LEAVE ENCASHMENT IS TAXABLE UNDER INCOME TAX ACT AT THE TIME OF

1 RETIREMENT

2 OR BEFORE RETIREMENT

THANKS & REGARDS

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
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25 May 2013 Whether Gratuity is taxable

Government employee

It is fully exempt from tax under section 10(10)(i)

Non-Government employee covered by the payment of Gratuity Act, 1972

It is fully or partly exempt from tax under section 10(10)(ii)

Non-Government employee not covered by the payment of Gratuity Act, 1972

It is fully or partly exempt from tax under section 10(10)(iii)

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
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25 May 2013 IN THE CASE OF EMPLOYEES COVERED BY THE PAYMENT OF GRATUITY ACT, 1972, [SEC. 10(10)(ii)]:-

Any gratuity received by an employee, covered by the Payment of Gratuity Act, 1972, is exempt from tax on the following basis

1.15 days’ salary( 7 days’ salary in the case of employee of a seasonal establishment) based on salary last drawn for each of service (i.e., 15 days’ salary × length of service)
2.Rs. 10,00,000
3.Gratuity actually received.

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
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25 May 2013 IN THE CASE OF EMPLOYEES NOT COVERED BY THE PAYMENT OF GRATUITY ACT, 1972,

Any gratuity received by an employee, not covered by the Payment of Gratuity Act, 1972, is exempt from tax on the following basis

1.Rs. 10,00,000/-
2.Half month’s average salary for each completed year service.
3.Gratuity actually received.

Vipin Kumar Sharma

Vipin Kumar Sharma (Querist)
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27 May 2013 THANKS FOR YOUR PROMPT REPLY

1 MAM WHAT DO YOU MEAN BY COVERD BY THE PAYMENT OF GRAUTITY ACT, OR NOT COVERD

2 GRAUTITY LIMIT HAS BEEN INCREASE FROM 350000 TO 1000000 FROM 24 MAY 2010 SECTION 4(3) SO WHAT IS EXEMPTION LIMIT AS PER NEW RULE

THANKS & REGARDS

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
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03 June 2013 Thanks for rectifying me it has been increased to Rs. 10 lacs.

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