Dear Friends can we deducted tax on Gratuity, Earned leave and paid notice period money in case of termination of any employee
From India, Bahadurgarh
Anonymous
8

Senior Executive Vice President - HR & OD
You cannot deduct tax from gratuity, since it is not taxable.
From Indonesia, Jakarta
raajesharya
21

Founder and Mentor @ Ethical Business Strategists LLP
1. Notice period - yes
2. Gratuity - depends on length of employment and the company policy on payment of gratuity.
a. If you follow the Payment of Gratuity Act, gratuity up to INR 10,00,000 can be exempt.
b. If the gratuity provision is voluntarily adopted by your company and paid prior to crossing the caveat period of the 5 year (4 year 240 days) caveat, to every employee ceasing employment, it would be taxable.
3. Leave Encashment - Taxable, in accordance with the Income tax Act, in a normal case. If the employee provides no-claim certification, it can be exempt up to INR 300,000.

From India, New Delhi
Avika
115

Yes you can deduct tax from Gratuity, Leave Encashment and Notice Pay amounts payable to a terminated employee.
All these components are Income under the Salary as per the Income Tax Law.
Gratuity is not taxable if it is upto Rs. 10 lacs. Any amount over Rs. 10 lac shall be taxable.
Leave Enchasment and Notice pay is fully taxable.
You have to add them to the salary for the financial year and then work out the tax on it.
If you need any professional help, please connect with us.

From India, New Delhi
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