Hi,
I spent 3.7 years in my company which recently closed down and in lieu of gratuity they paid me the amount as ex gratia for 4 years and deducted TDS on the same.
Can I claim tax relief for the same?
-Enigma
I spent 3.7 years in my company which recently closed down and in lieu of gratuity they paid me the amount as ex gratia for 4 years and deducted TDS on the same.
Can I claim tax relief for the same?
-Enigma
Hello Dinesh,
Gratuity can be received by the employee at the time of his retirement or by his legal heir in the event of death of the employee. Gratuity received by an employee on his retirement is taxable under the head "Salary" and gratuity received by the legal heir is taxable under the head" Income from Other Sources".
In both the above situations gratuity upto a specified limit is exempt under the provisions of sec.10(10) of the Income Tax Act, 1961.
For the purpose of exemption of gratuity under sec.10(10) the employees are divided under three categories:
1) Govt. employees - In the case of govt. employees the entire amount of death-cum-retirement gratuity is exempt from tax and nothing is therefore taxable under the head Salaries.
2) Employees covered under the Payment of Gratuity Act, 1972 - The employees covered under the Gratuity Act who receive gratuity have been given exemption which is the minimum of the following amounts. Gratuity received in excess of the minimum of the amounts mentioned below is included in the gross salary for the purposes of taxation.The amount of gratuity actually received. Fifteen days' salary (7 days in the case of seasonal employment) for every completed year of service provided the employment is more than six months.
3) Other employees - In the case of other employees the gratuity received or receivable on his retirement or on his becoming incapacited prior to such retirement or termination of his employment or any gratuity received by his heirs is exempt to the extent of the minimum of the following amounts. The amount received in excess of the sums mentioned below is included in the gross salary of the employee for the purposes of taxation.Actual amount of gratuity received. Half month's average salary for every completed year of service. (Average salary means the average of the salary drawn by the employee for 10 months immediately preceding the month in which he retires).
Regards,
Ashish
From India, Pune
175Gratuity can be received by the employee at the time of his retirement or by his legal heir in the event of death of the employee. Gratuity received by an employee on his retirement is taxable under the head "Salary" and gratuity received by the legal heir is taxable under the head" Income from Other Sources".
In both the above situations gratuity upto a specified limit is exempt under the provisions of sec.10(10) of the Income Tax Act, 1961.
For the purpose of exemption of gratuity under sec.10(10) the employees are divided under three categories:
1) Govt. employees - In the case of govt. employees the entire amount of death-cum-retirement gratuity is exempt from tax and nothing is therefore taxable under the head Salaries.
2) Employees covered under the Payment of Gratuity Act, 1972 - The employees covered under the Gratuity Act who receive gratuity have been given exemption which is the minimum of the following amounts. Gratuity received in excess of the minimum of the amounts mentioned below is included in the gross salary for the purposes of taxation.The amount of gratuity actually received. Fifteen days' salary (7 days in the case of seasonal employment) for every completed year of service provided the employment is more than six months.
3) Other employees - In the case of other employees the gratuity received or receivable on his retirement or on his becoming incapacited prior to such retirement or termination of his employment or any gratuity received by his heirs is exempt to the extent of the minimum of the following amounts. The amount received in excess of the sums mentioned below is included in the gross salary of the employee for the purposes of taxation.Actual amount of gratuity received. Half month's average salary for every completed year of service. (Average salary means the average of the salary drawn by the employee for 10 months immediately preceding the month in which he retires).
Regards,
Ashish
From India, Pune
If payment is made as ex-gratia or voluntary by an employer out of his own sweet will and not conditioned by any legal duty or legal obligation, whether on sympathetic reasons or otherwise, such payment is not to be treated as ‘profits in lieu of salary’ under sub-clause (i) of section 17(3) of Income-tax Act
So in nutshell Ex Gratia paid is taxable as per Income Tax Act
From India, Ahmadabad
So in nutshell Ex Gratia paid is taxable as per Income Tax Act
From India, Ahmadabad
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Amendment to Payment of Bonus Act 2015.jpg
Online payment of PF mandatory from 1.1.2016.pdf
PAYMENT OF WAGES ACT 2009.doc