Tax on Gratuity

HI,

The provision is mentioned below:

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10(10)(i) Any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence services;

(ii) Any gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972), to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of section 4 of that Act 185 ;

(iii) Any other gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retirement or on termination of his employment, or any gratuity received by his widow, children or dependants on his death, to the extent it does not, in either case, exceed one-half month's salary for each year of completed service, calculated on the basis of the average salary for the ten months immediately preceding the month in which any such event occurs, subject to such limit 188 as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government:

Provided that where any gratuities referred to in this clause are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this clause shall not exceed the limit so specified:

Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this clause shall not exceed the limit so specified as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years : 

Explanation : In this clause, and in clause (10AA), "salary" shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule; 

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yes, gratuity is very much the part of salary  and taxable as salary only.......Hence the company is right in deducting the TDS.....howevery if u think u would not be having any tax liability, u can later claim refund.,..............

sir plz tell me how we can calculate tds on gratuity

ADD THE GRATUITY AMOUNT IN THE AGGREGATE SALARY AND APPLYING THE SLAB RATE, FIND THE TDS ACCORDINGLY....!!!!!!! RELEIF U/S 89 CAN ALSO BE TAKEN...!!!!!!!!!!!!

sir but while calculating tds on salary we have divide tax liability by no. of remaining month, bt in my case gratuity is received at the time of death, so how can we calculate?

see ! if in the event of death, on the gratuity being recieved by the widow, the amount to the extent the non-exempted gratuity [i.e. after giving exemption of Sec.10(10)], recieved exceeds the minimum limit not chargeable to tax, liable to TDS at the application of slab rates........

suppouse gratuity recieved is Rs.275000/-. exemption, let say, u/s 10(10) is 100000/-. assuming no other payment recieved on death, the amount of Rs.175000 is liable to tax. hence to the extent of Rs.150000 no tax. On Rs.25000, tax of Rs.2575 is deducted from the gratuity of Rs.275000 and the payment net of tax shall be recieved by the widow......!!!!