Gratuity for 3 Years of Servcie – We are running a SME. Is it possible to give gratuity to someone who has completed 3 years of service? Will it be treated as an allowable expense for Income Tax Purposes?
1 Replies
CA.SKR
(CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional)
(442 Points)
Replied 21 January 2010
| Originally posted by : Muthu | ||
 |
Gratuity for 3 Years of Servcie – We are running a SME. Is it possible to give gratuity to someone who has completed 3 years of service? Will it be treated as an allowable expense for Income Tax Purposes? |  |
The employee in question is not entitled for gratuity under Payment of Gratuity Act, since he has not completed continuous service of 5 years. However, if company is paying gratuity on 3 years of service, in my opinion, it should be allowed as allowable expenditure for income tax purpose because this expense is business expenditure for the company.
CA. Satendar Kumar
Mobile No. 9810543531
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