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Gratuity from LIC to agents

vibhor (seth) (36 Points)

06 July 2018

My father (lic agent) received a gratuity from LIC of India for completing 60 years amounting Rs.2 lacs. Tax deducted rs. 10000. What is the taxability of gratuity for lic agents.

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4 Replies

Kavita Modi (CA Job) (232 Points)
Replied 06 July 2018

Your father is LIC agent this means he is Non government employee however he coves under Gratuity Act 1972 and as per the rule exemption available for the same is the least of the following:

Rs. 20 lakhs after 7th pay revision or

Last drawn salary (Basic +DA)* 15/26* no of year service done (if in last year it is more than 6 months then that year has been considered as a complete year of service)

Also, you have to keep this fact in mind that this exemption of Rs, 20 lakhs is for all the services during the lifetime of the employee it means that if any gratuity exemption has already been claimed in his previous service then the same will be reduced from 20 lakhs and balance can be claimed in this service.

In your case your father should not have claimed the exemption under gratuity for more than Rs. 18 lakhs in any previous service.

Kavita Modi (CA Job) (232 Points)
Replied 06 July 2018

Prakash Kochar (Tax Practitioner) (2114 Points)
Replied 17 June 2019

It is not salary. No relation as employer or employee, but is commission earner agent. Under which section of Income Tax he is entitle for exemption ?.