Income Tax

Income tax on Gratuity Arrears paid after the Gratuity Limit Increased to Rs.10/-Lacs



Respected sir                                                                                                                                    ,23/03/2011
I am a retired Bank official retired on 30/09/2009.At the time of my retirement the exemption limit for Gratuity was Rs.3.5/lacs.However due to wage revision i got arrears of Gratuity Rs.151000/-In the month of Aug 2010 by which time Gratuity Exemption limit was raised to Rs.10,00 000/- Whether gratuity arrears of Rs.151000/- received by me in Aug,2010 is taxable? My total Gratuity amount received is less than Rs.10/- Lacs
 

- Gradutity is accounted on date of receipt , not on date of accural, so u r eligible for 10L limit.

Second query I paid Rs.606001/- by way contribution towards Pension fund to avail Pension option which was compulsory if u want to exercise second option of pension.This is applicable to all employees who now opted for pension has to contribute 56% of the banks contribution they received which also has to be refunded.

- The payment is made out of the contribution paid to you or in other words its the return back of the % of payment made to you from PF/Pension fund, so it does not have any impact with your pension received or receivable.

Question is whether we can claim exmption for the amount we received by way of pension? In my case I received Pension of Rs.274008/- up to Oct 2011 and I paid Rs.606001/- towards pension cost.As this amount is not paid to us but adjusted against purchase cost of pension

Pl note i had to pay

Rs.1021858 Banks' contribution

+ Rs.572274/- 56% of Bk's contribution

Total Rs.1594098/-

But this amount was adjusted against

Rs.714089 Commutation (non taxable) payable to me

and Rs.274008/- Pension arrears (Taxable) payable to me up to oct 2010 and I paid net amount of Rs.606001/- towards the purchase price of Pension

Since the year ending is very close i request u to assist me in the matter at your earliest.
This will be useful to all employees in the Banking Industy who opted for second option of pension

with regards

RHR MUMBAI