Does employer cut Income tax on Gratuity? Is Gratuity is a taxable amount? If yes; how incometax is cut on gratuity? what are the rules?
From India, Pune
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From India, Pune
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Tax Treatment of Gratuity
For the purpose of exemption of gratuity under section 10(10), employees are divided into three categories:
1. Any death-cum-retirement gratuity received by Central and State Government employees, Defense employees, and employees in Local authorities shall be exempt.
2. Any gratuity received by persons covered under the Payment of Gratuity Act, 1972 shall be exempt subject to the following limits:
- For every completed year of service or part thereof, gratuity shall be paid at the rate of fifteen days' wages based on the rate of wages last drawn by the concerned employee.
- The amount of gratuity as calculated above shall not exceed Rs. 10,00,000.
3. In the case of any other employee, gratuity received shall be exempt, subject to the following exemptions:
- Exemption shall be limited to half-month salary (based on the last 10 months' average) for each completed year of service or Rs. 10 Lakhs, whichever is less.
- Where the gratuity was received in any one or more earlier previous years also and any exemption was allowed for the same, then the exemption to be allowed during the year gets reduced to the extent of exemption already allowed, the overall limit being Rs. 10 Lakhs.
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From India, Delhi
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81For the purpose of exemption of gratuity under section 10(10), employees are divided into three categories:
1. Any death-cum-retirement gratuity received by Central and State Government employees, Defense employees, and employees in Local authorities shall be exempt.
2. Any gratuity received by persons covered under the Payment of Gratuity Act, 1972 shall be exempt subject to the following limits:
- For every completed year of service or part thereof, gratuity shall be paid at the rate of fifteen days' wages based on the rate of wages last drawn by the concerned employee.
- The amount of gratuity as calculated above shall not exceed Rs. 10,00,000.
3. In the case of any other employee, gratuity received shall be exempt, subject to the following exemptions:
- Exemption shall be limited to half-month salary (based on the last 10 months' average) for each completed year of service or Rs. 10 Lakhs, whichever is less.
- Where the gratuity was received in any one or more earlier previous years also and any exemption was allowed for the same, then the exemption to be allowed during the year gets reduced to the extent of exemption already allowed, the overall limit being Rs. 10 Lakhs.
Thank you.
From India, Delhi
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