Gratuity

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DEEPAK GOYAL (Querist)
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03 August 2010 Dear Friends if any employee received gratuty before 5 years after left the job. then the gratuity received by him will be taxable or not?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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03 August 2010 Gratuity payment liability accrues after completion of 5 year of service.

If voluntarily paid then u could claim exemption u/s 10(10)(iii) as no no. of year service is mentioned.

DEEPAK GOYAL

DEEPAK GOYAL (Querist)
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03 August 2010 can't understant my friend. i repeat once again. if any employee left the job within 3 years and employer paid him gratuity because gratuity includes in his CTC. then the amount received by him as grtuity will be taxable or not?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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03 August 2010 Read section 10(10)(iii) if u can be covered under that exemption.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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03 August 2010 Gratuity

Any death cum retirement gratuity received by Government or Local Authority employees is exempt from tax. For Non-Government Employees the taxability depends on whether Gratuity is covered under the Gratuity Act

A) Gratuity covered under the Gratuity Act

For Gratuity covered under the Gratuity Act, total of gratuity received by an employee, covered by the Gratuity Act, from various employers in whole of service is exempt from tax to the extent of least of the following three amounts:

15 days' salary, based on the last drawn salary, for each completed year of service
Rs.10,00,000/-; or
The gratuity actually received.
B) Gratuity not covered under the Gratuity Act

For Gratuity not covered under the Gratuity Act any gratuity not covered by the Gratuity Act, is exempt from tax to the extent of least of the three amounts

The half month's salary for each completed year of service; or
Rs.10,00,000/-; or
The gratuity actually received.

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