Are the terminal benefits given after my dad's death taxable

Hi,

My dad was a bank employee and he passed away in March 2010 while in service. The PF, gratuity, insurance and other benefits got credited to my mother during last financial year. My query is if this should be considered as taxable income for my mother? If so which among these benefits should be considered for tax?


Thanks in advance.

Regards,

Harish J

Replies (3)

Harish (Engineer) kahan tax ke chakkar mein fans gaye. 

Pension will be taxable in the hands of legal heirs under the head other sources after claiming deduction u/s 57 either 1/5th or 15000 whichever is lower.

Leave salary is exempt : There is a income tax circular.

Gratuity : There is a difference in opinion. Some say it should be taxable others say it is exempt. In your case I can say it is taxable since gratuity payable should be mentioned in the contract of employment.

PF exempt u/s 10(12)

Thanks

added to the reply of respected @ kaushal

Taxability of graduity (subject to ceiling) may get applied if the employee is alive, but in case of his death, its superauunation fund received by legal heir, and it is not income for her, so i feel that its not a taxable income.

However if its put taxable by employer, 89(1) benefit is still available for claim.

In this case, Gratuity received by legal heir will be taxable in the hands of "Income from other sources" there are two ways

Employees covered under gratuity act                                                  any other employee

minimum of the 3 limits:                                                                          minimum of the 3 limits:

1). actual amt. received or                                                                       1). actual amt. received

2). 15 days salary for completed year,                                                  2). Half months average salary of each  or part  exceeding 6 months 7 days salary for each                         completed year of service

season in case of employee in seasonal establishment or          3). Rs. 10 lakh prior to 24/05/2010

3). Rs. 10 lakh prior to 24/05/2010 it was 350000/-                              it was 350000/-     

 

  

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