Gratuity for 3 Years of Servcie – We are running a SME. Is it possible to give gratuity to someone who has completed 3 years of service? Will it be treated as an allowable expense for Income Tax Purposes?
Muthukumar Ramalingam (Director) (49 Points)
21 January 2010Gratuity for 3 Years of Servcie – We are running a SME. Is it possible to give gratuity to someone who has completed 3 years of service? Will it be treated as an allowable expense for Income Tax Purposes?
CA.SKR
(CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional)
(442 Points)
Replied 21 January 2010
| Originally posted by : Muthu | ||
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Gratuity for 3 Years of Servcie – We are running a SME. Is it possible to give gratuity to someone who has completed 3 years of service? Will it be treated as an allowable expense for Income Tax Purposes? |  |
The employee in question is not entitled for gratuity under Payment of Gratuity Act, since he has not completed continuous service of 5 years. However, if company is paying gratuity on 3 years of service, in my opinion, it should be allowed as allowable expenditure for income tax purpose because this expense is business expenditure for the company.
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