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Gratuity - Taxable or not

Shamita (Learner) (410 Points)

11 February 2011

My aunt has received gratuity of Rs. 6 lacs in Feb. 2010 on retirement from Government school. Will it be taxable?

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18 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 11 February 2011

Its fully exempt.

chandan ghosh (none) (196 Points)
Replied 11 February 2011

i think it will be exempt...see sec 10 (10)(i)

Shamita (Learner) (410 Points)
Replied 11 February 2011

But I have read that gratuity is exempt upto Rs. 3.50 lacs.

Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 11 February 2011

The limit has been rasied to Rs. 10 Lakhs

Akanksha Hans Marwaha (Learning & Learning ) (360 Points)
Replied 11 February 2011

The Gratuity limit has been extended to Rs. 10 lacs

Saurabh garg (article) (78 Points)
Replied 12 February 2011

Gratuity recd by Govt employee and employee of local authority than it is fully exempt.

In this case we not see limit of Rs.3,50,000

Whole amount is exempt

narinder (gm accounts) (25 Points)
Replied 12 February 2011

As per sec 10 (10)(i) of the income tax act 1961 gratuity received by an govt. employee is fully exempted from the preview of the Income Tax , but in the case of pvt. employee it is relaxa up to the amount of Rs. 350,000 which is recently extend up to RS. 10 lacs

Dr. Narinder Shukla

Advocate

pankaj kumar alok (professional) (26 Points)
Replied 12 February 2011

In the case of GOVERNMENT EMPLOYEE { Sec. 10(10)(i)} any death- cum- retirement gratuity received by an employee of the CENTRAL , State Govt. or Local Authority , is wholly exempt from Tax.

Om Prakash Regmi (Subject Matter Expert) (582 Points)
Replied 12 February 2011

Gratuity received to govt employees is fully exempt

Azim Khan ACA,CS,CMA*,LLB* (Proprietor) (1312 Points)
Replied 12 February 2011

agreed to all the expert advices.

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 13 February 2011

Gratuity can be received by the employee at the time of his retirement or by his legal heir in the event of death of the employee. Gratuity received by an employee on his retirement is taxable under the head "Salary" and gratuity received by the legal heir is taxable under the head" Income from Other Sources". In both the above situations gratuity upto a specified limit is exempt under the provisions of sec.10(10) of the Income Tax Act, 1961. For the purpose of exemption of gratuity under sec.10(10) the employees are divided under three categories: Govt. employees - In the case of govt. employees the entire amount of death-cum-retirement gratuity is exempt from tax and nothing is therefore taxable under the head Salaries. Employees covered under the Payment of Gratuity Act, 1972 - The employees covered under the Gratuity Act who receive gratuity have been given exemption which is the minimum of the following amounts. Gratuity received in excess of the minimum of the amounts mentioned below is included in the gross salary for the purposes of taxation. The amount of gratuity actually received. Fifteen days' salary (7 days in the case of seasonal employment) for every completed year of service provided the employment is more than six months. Other employees - In the case of other employees the gratuity received or receivable on his retirement or on his becoming incapacited prior to such retirement or termination of his employment or any gratuity received by his heirs is exempt to the extent of the minimum of the following amounts. The amount received in excess of the sums mentioned below is included in the gross salary of the employee for the purposes of taxation. Actual amount of gratuity received. Half month's average salary for every completed year of service. (Average salary means the average of the salary drawn by the employee for 10 months immediately preceding the month in which he retires)

zoro_manas (trainer) (21 Points)
Replied 13 February 2011

As per sec 10 (10)(i) of the income tax act 1961 gratuity received by an govt. employee is fully exempted from the advertisement of the Income Tax , but in the occurrence of pvt. employee it is relaxa up to the assets of Rs. 350,000 which is new motion up to RS. 10 lacs

______

manas

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