I understand that, as per the recent government notification, the income tax exemption limit on the gratuity amount payable to non-Central government employees retiring on or after 25/05/2010, has been raised from Rs. 3.5 lakhs earlier to Rs. 10 lakh. While this exemption is available to Central government employees retiring on or after 01.01.2006 itself.
If this understanding is correct, then it means that the gratuity amount in excess of Rs. 3.5 lakhs, in respect of non-Central government employees retiring between 01.01.2006 and 24.05.2010, will attract income tax. Is this not very strange, shocking, and horrifying? How can our Indian Constitution allow - for the same retirement date - different income tax exemption limits on the gratuity amount payable on retirement to (1) Central Government employees (2) the non-Central government employees? Are the non-Central government employees not really 'Indians' or are they 'inferior' Indians? Is the principle of 'Natural Justice' not applicable in this case?
In my opinion, the term "Unjust Law", which I believe was used by Mahatma Gandhi for some laws made by the British, will truly fit in the above-narrated case if indeed the gratuity amounts in excess of Rs. 3.5 lakhs (up to Rs. 10 lakh) payable to non-Central government employees retiring between 01.01.2006 and 24.05.2010 are attracting income tax while it is totally exempt in the case of Central government employees. Why can't this situation be corrected?
From India, Bhopal
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If this understanding is correct, then it means that the gratuity amount in excess of Rs. 3.5 lakhs, in respect of non-Central government employees retiring between 01.01.2006 and 24.05.2010, will attract income tax. Is this not very strange, shocking, and horrifying? How can our Indian Constitution allow - for the same retirement date - different income tax exemption limits on the gratuity amount payable on retirement to (1) Central Government employees (2) the non-Central government employees? Are the non-Central government employees not really 'Indians' or are they 'inferior' Indians? Is the principle of 'Natural Justice' not applicable in this case?
In my opinion, the term "Unjust Law", which I believe was used by Mahatma Gandhi for some laws made by the British, will truly fit in the above-narrated case if indeed the gratuity amounts in excess of Rs. 3.5 lakhs (up to Rs. 10 lakh) payable to non-Central government employees retiring between 01.01.2006 and 24.05.2010 are attracting income tax while it is totally exempt in the case of Central government employees. Why can't this situation be corrected?
From India, Bhopal
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I retired from a PSU on 31/01/2010 and received gratuity of Rs. 10 lakhs (3.5 Lakhs exempted from Income Tax and 6.5 lakhs non-exempted from Tax). Gratuity was paid on the instruction of BPE after the implementation of the new scale w.e.f. 1/01/2007. We request the Finance Minister, Government of India, to take care of employees of PSUs who retired between 1/1/2007 to 24/05/2010. These employees are serving the nation as the employees of Central/State/Local bodies. PSUs are also run by the Government, and their employees are making contributions to the growth of the nation. Why are the employees of PSUs not treated at par with Central/State/Local Bodies employees concerning Gratuity and tax exemption?
Will CITEMAN HR send our request to the Finance Minister, Government of India?
ISHER KUMAR ARORA
From India, Delhi
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3Will CITEMAN HR send our request to the Finance Minister, Government of India?
ISHER KUMAR ARORA
From India, Delhi
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Gratuity - Taxation Issues.docx
FORM-F-NOMINATI ON OF GRATUITY.pdf