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Gratuity

Anita Kulkarni (Student CA Final ) (166 Points)

31 March 2016

is gratuity received taxable to an Pvt Ltd CO employee ,if he is leaving the job an going to abroad for job

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3 Replies

Vikas Gupta (Tax Executive) (530 Points)
Replied 01 April 2016

If the person has received Gratuity amount, the company may give him exemption u/s 10 (10). This section applies in case of resignation also.

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Anita Kulkarni (Student CA Final ) (166 Points)
Replied 01 April 2016

but gratuity received after retirement is exempt na and gratuity received during employment is taxable ?

Vikas Gupta (Tax Executive) (530 Points)
Replied 02 April 2016

U/s 10(10) gratuity recd by state govt/central govt/defence/local authority employee after retirement shall be totally exempt. In case of any other employees, Gratuity is exempt to the extent of least of following --

(ii) Any gratuity received by persons covered under the Payment of Gratuity Act, 1972 shall be exempt subject to following limits:-

(a) For every completed year of service or part thereof, gratuity shall be exempt to the extent of 15 days Salary based on Salary last drawn by employee.

(b) Maximum limit as declared by Govt. i.e. Rs. 10 Lakh in present.

(iii) Any gratuity received by persons NOT covered under the Payment of Gratuity Act, 1972 shall be exempt subject to following limits:-

(a) Half month salary (based on last 10 months average) for each completed year of service or part thereof

(b) Rs. 10 Lakhs, whichever is less.

Pls note salary for this pupose means 'Basic salary + DA + Commision, if based on at a fixed percentage on sales.