Dear All,
Recently, I quit my job and received my gratuity payments after completing 8 years and 8 months of service. Thus, for the calculation of gratuity, my eligible number of years was correctly rounded off to 9 years. However, when tax was computed on my gratuity for deduction at the source, they considered 8 years for the calculation and not 9 years.
When questioned, the reason given to me was that the gratuity laws and the income tax laws are two separate identities. The gratuity laws allow more than 6 months of service to be rounded off to 1 year; however, the income tax requires a complete year.
I feel this is incorrect and unjust. Effectively, my 8 months of service were neglected. Can the government have such out-of-sync calculation guidelines? Any recommendations, advice, or suggestions, please!
From India, Pune
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Recently, I quit my job and received my gratuity payments after completing 8 years and 8 months of service. Thus, for the calculation of gratuity, my eligible number of years was correctly rounded off to 9 years. However, when tax was computed on my gratuity for deduction at the source, they considered 8 years for the calculation and not 9 years.
When questioned, the reason given to me was that the gratuity laws and the income tax laws are two separate identities. The gratuity laws allow more than 6 months of service to be rounded off to 1 year; however, the income tax requires a complete year.
I feel this is incorrect and unjust. Effectively, my 8 months of service were neglected. Can the government have such out-of-sync calculation guidelines? Any recommendations, advice, or suggestions, please!
From India, Pune
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Thank you for your reply. However, the documents at your link do not provide the assistance I need. They only discuss the process or method for calculating gratuity. I am seeking a detailed explanation on how to calculate the tax on gratuity, particularly regarding how to determine the "completed years of service" in the tax calculation formula when an employee has finished more than 6 months in the last year of service but not the full year. In such a scenario, how should we consider the last year of service? Is it counted as 1 full year (as done for the calculation of gratuity) or should we disregard those months entirely?
For instance, in the case of 8 years and 8 months of service, is this considered as 8 years or 9 years of completed service for tax computation? (This question pertains to tax calculation and not gratuity calculation, as it is clear that it would be 9 years for gratuity calculation).
From India, Pune
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For instance, in the case of 8 years and 8 months of service, is this considered as 8 years or 9 years of completed service for tax computation? (This question pertains to tax calculation and not gratuity calculation, as it is clear that it would be 9 years for gratuity calculation).
From India, Pune
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Gratuity - Taxation Issues.docx