Gratuity taxable on receipt or due basis

Dear Prashant,

Any death cum retirement gratuity received by Central and State Govt. employees, Defense employees and employees in Local authority shall be exempt u/s 10

In other cases if received by legal heirs then it is taxable under "income from other sources", since it is taxable under other sources where assesse has an option to offer his income to tax either on receipt basis or on accrual basis..

Therefore it is upto the assessee in which year it is to be taxed but exemption u/s 10 upto Rs, 3.50 lacs is available only in the year of receipt, therefore it should be offer to tax in FY 2010-2011 so that Exemption u/s 10 can be claimed

Dear Prashant

As Salary becomes taxable on due basis.......Whether any salary is due but npt received then it will be taxable on due basis. So it is taxable in current A.Y.

Dear Sorabh,

 U r rite brother that Salary is taxable on receipt or due whichever is earlier basis. But in the present case gratuity is received by legal heirs, it won't be taxable under salary.

Had it been on retirement of the employee(i:e received by the employee himself & not by his legal heirs) then yes it would have been taxed in the year in which it became due.

YES I AGREE WITH AMIR  B UT LITTLE BIT CONFISUION   U\S 10 EXEMPTION IS AVILIABLE ONLY CENTRAL AND STATE GOVT EMPLOYEES BUT IS IT APPLY LEGAL HEIRS ALSO

Nice question by lakshmikanth,,, is it not Death-cum-retirement gratuity of central and state govt employees.....? So it should be exempt under sec 10....

an employee is retirng in March and will get gratuity in april

My question is

Gratuity will be taxaxble in the FY 09-10 or 10-11

Dear Girish,

If it is received by employee then it has to be taxed in the year in which it is received or becomes due whichever is earlier........

So I think in ur case it's FY 2009-2010