Gratuity and Taxes: Can Anyone Clarify If the 10 Lakh Limit Is Taxable?

Hi, as the maximum limit of gratuity is 10 lakhs, can anybody confirm whether the gratuity amount is taxable under income tax or not?

Regards,
Narender

Gratuity Taxation Clarification

To the extent of the maximum limit of gratuity as per the Payment of Gratuity Act, it is not taxable. However, any amount paid by the employer over and above ₹10 lakhs (as per the present law) will be taxable.

Regards,
Madhu.T.K

Thank you for the information. If any organization is providing 20 days of gratuity, is the amount for the additional 5 days taxable or not? This question arises because only 15 days are mandatory according to the Gratuity Act.

It is not the 5 days' wages part but the total amount in excess of Rs 10 lakhs that will become taxable. However, you can seek expert opinions from Chartered Accountants or Financial Experts about the treatment of the taxable portion of gratuity. If an employer pays gratuity at 20 days for every completed year of service as opposed to 15 days, will that additional 5 days' pay, exceeding what is stated in the Act, be treated as taxable?

Regards,
Madhu.T.K