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Clarification on Gratuity Exemption under Section 10(10) for Death or Physical Disability Cases

581 views 2 replies

Suganya Krishnamoorthy

1 Points Posted on 15 June 2026

For an employee covered under the Payment of Gratuity Act who receives ₹30,00,000 as gratuity due to death or physical disability, what is the maximum exemption available under Section 10(10) of the Income-tax Act? Is the exemption limited to ₹20,00,000 or is any higher exemption available in such cases? Does the exemption amount differ between the Old Tax Regime and New Tax Regime?

Replies (2)

Quick Summary

A taxpayer seeks clarification on gratuity exemption under Section 10(10) for employees covered by the Payment of Gratuity Act in cases of death or physical disability. The query focuses on whether the exemption exceeds Rs 20 lakh and whether tax treatment differs under the old and new tax regimes.

Aashok FC Advisory

Finance Compliance Consultant

1116 Points Posted on 16 June 2026

Exemption Limit: The statutory cap for tax-free gratuity for private employees is ₹20,00,000. Any amount received in excess of this is taxable, unless specifically exempt due to death or disability.
Death/Disability: In cases of death or disability, the entire amount may be exempt from tax, as it is often treated as a capital receipt for the beneficiary.
Tax Regime: The exemption rules under Section 10(10) are identical for both the Old and New Tax Regimes.