Dear Friends, As all of us know the maximum ceiling for gratuity is Rs. 10 lakhs. Please let us know the tax implication on gratuity payments made to an employee. Regards, Srinivasan
From India, Mumbai
From India, Mumbai
Dear Friend,
Gratuity is exempted upto Rs.10,00,000/- from Income Tax. If we pay more than that amount would be added into total income and tax to be deducted as per slabs.
For example if we Paid Rs. 10,50,000/- as a gratuity to an employee Rs. 10,00,000 would be considered as exempted amount rest of Rs. 50,000/-would be added into his total income and tax to be deducted accordingly.
From India, Hyderabad
85Gratuity is exempted upto Rs.10,00,000/- from Income Tax. If we pay more than that amount would be added into total income and tax to be deducted as per slabs.
For example if we Paid Rs. 10,50,000/- as a gratuity to an employee Rs. 10,00,000 would be considered as exempted amount rest of Rs. 50,000/-would be added into his total income and tax to be deducted accordingly.
From India, Hyderabad
TELIKEPALLI is correct provided the calculation is in compliance with the Payment of Gratuity Act. i.e If the above act is applicable, fraction of more than six months will be rounded as one year and added to the completed years which will be multiplied by last drawn salary x 15/26. If the above act is not applicable, fraction will be rounded off / fully neglected and only completed years will be taken into account which will be multiplied by last drawn salary x 15/30. Hence alongwith the ceiling amount the formula to calculate gratuity will also be a factor in tax exemption.
But in case of death cum retirement, the full amount will be exempted from income tax.
Abbas.P.S
From India, Bangalore
But in case of death cum retirement, the full amount will be exempted from income tax.
Abbas.P.S
From India, Bangalore
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Excel sheet for Tax deduction.xls
REQUEST FOR DEDUCTION OF GRATUITY AMOUNT (2).pdf