Tax from gratuity

This query is : Resolved

Ravindra Nath Vatsa (Querist)
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13 May 2010 An officer reitired on 31st December 2009. His gratuity was not released because he did not vacate the Bank's quarters as per the rules of the organisation. He vacated the same in April 2010. We would like to know whether the tax on gratuity will be calculated as per F.Y. 2009-2010 or 2010-11. We may also like to know if any income is due in a particular year (not arrears) but released in another financial year, tax is to be deducted as per the rules applicable in F.Y. when it was due or the current year when it is paid actually.

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taxindiaconnect (Expert)
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13 May 2010 Salary is taxable in the year of receipt of due which ever is earlier. Payment of gratuity is covered under definition of salary as per section 17 of IT Act. , In this case the salary was sue on 31.12.09, it will be taxable in the FY 2009-10 though paid in 2010-11.