Whether Gratuity Is Taxable?
CiteLegal
 
HOME RISE NEW ABOUT LOGIN
Home > Human Resource Section > Employee Compensation & Benefits

Whether Gratuity Is Taxable?

subhashinisankara Started The Discussion:

Dear Frinds, I got a doubt regarding Gratuity, whether the amount is taxable or not? Regards Subha

Suresh Ramalingam - Member Since: Mar 2007
Dear Subha,

Gratuity Exemption
(i) Exemption in case of employees who received gratuity under payment of gratuity Act, 1972 the minimum of the following amount is exempt from tax.
(a)The amount Gratuity actually received.
(b)15 days salary for every completed year of service
(c)Rs. 3,50,000/-

Note:
1. Salary means- Basic + DA
2. For calculating completed year of service , more than 6 months shall be considered as completed year. A period of 6 months or less than 6 months shall be ignored.
3. 15 days salary shall be calculated as below. ie. (Basic+DA)*15/26


ii) Exemption in case of other employees, the minimum of the following amount is exempt from tax.

(a)The amount Gratuity actually received.
(b)Half month’s average salary for every completed year of service
(c)Rs. 3,50,000/-

Note:
1. Salary means- Basic + DA
2. In calculating completed year of service, part of the year whether more or less than 6 months, will be ignored.
3. Average salary is to be calculated on the basis of the average salary for last 10 months.

General Note for both categories:
1. Gratuity received during the service is fully taxable.
2. Where an employee had claimed gratuity exemption earlier employment, then the maximum limit Rs. 3,50,000/- shall be reduced by the amount of exemptions availed earlier years.

Rgds,
Suresh Ramalingam

samitmax - Member Since: Mar 2010
Whether Gratuity amount receiveable w.e.f. 01.01.2007 subsequent to enhancement of ceiling of Gratuity from Rs. 3.5 lakhs to Rs. 10.0 lakhs is taxable, as per DPE guidelines dated 26.11.2008 which speaks about the pay revision of Executives of CPSEs ?

Found This Useful? +Vote Up This Page Via Google.  

Why Vote? User validation is extremely important for good content to prosper.
Disclaimer: This network and the advice provided in good faith by our members only facilitates as a direction towards the actions necessary. The advice should be validated by proper consultation with a certified professional. The network or the members providing advice cannot be held liable for any consequences, under any circumstances.






Explore Topical Knowledge Areas

Interesting Relevant Discussions


DISCUSSSION STATISTICS


4831
VIEWS

2
REPLIES

PLEASE KEEP YOUR CONDUCT PROFESSIONAL AND POLITE


3M Users, 100K+ Documents & 450K+ Discussions

Share »

Community Support & Professional Insights. Login or Register.
Email/Username     Password  

About Us - Advertise - Contact Us - RSS   On Google+  
All trademarks and copyrights held by respective owners. Member comments are owned by the poster.
Privacy Policy | Disclaimer | Terms Of Service
Facebook Page | Follow Us On Twitter | Linkedin Network