Please help me. What is maximum limit amout to be paid as gratuity & will be exempted under Income tax? Kindly also provide any written document as support. Regards Milind Shende
From India, Mumbai
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From India, Mumbai
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The maximum amount of gratuity payable under the Payment of Gratuity Act, 1972 is Rs 3.5 lakh. The amount received is not taxable. Regards, Madhu.T.K
From India, Kannur
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4482From India, Kannur
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Dear Madhu/Milind,
The Gratuity Act does not limit the maximum amount that a person can receive in the form of gratuity. Payment of Gratuity Act 1972 Sec. 4(5) states that an employer can cap their liability to a maximum of Rs. 3.5 lakh per employee, but nothing in the law prohibits them from providing a better benefit than the one mentioned.
Although the Income Tax Act specifies that as long as the gratuity amount does not exceed 8.33% of an employee's annual salary, it is not taxable even if it crosses the 3.5 lakh limit (Ref. Income Tax Act RR 98 to 111).
There are companies that pay gratuity without a cap, meaning an employee can accumulate gratuity as long as they work, even if it exceeds the 3.5 lakh limit.
From India, Hyderabad
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The Gratuity Act does not limit the maximum amount that a person can receive in the form of gratuity. Payment of Gratuity Act 1972 Sec. 4(5) states that an employer can cap their liability to a maximum of Rs. 3.5 lakh per employee, but nothing in the law prohibits them from providing a better benefit than the one mentioned.
Although the Income Tax Act specifies that as long as the gratuity amount does not exceed 8.33% of an employee's annual salary, it is not taxable even if it crosses the 3.5 lakh limit (Ref. Income Tax Act RR 98 to 111).
There are companies that pay gratuity without a cap, meaning an employee can accumulate gratuity as long as they work, even if it exceeds the 3.5 lakh limit.
From India, Hyderabad
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In 6th Pay Commission The Maximum Amount Of Gratuity Has Been Enhanced To Rs.10.00 Lakhs.is This Amount Will Be Payable To Other Govt./govt.undertaking Employees Also.
From India, Mumbai
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From India, Mumbai
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Pay commission declaration is for government employees, whereas we have been discussing the Payment of Gratuity Act, 1972. The gratuity payable to government employees is entirely different from the one specified in the aforementioned Act.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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Sec 4 of the Payment of Gratuity Act, 1972 lays down that nothing in the section shall prohibit the employee from receiving a greater amount of gratuity than the minimum prescribed. If the employer is offering better terms in gratuity, the employee can accept it. Up to 3.5 lakhs is exempted.
From India, Delhi
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From India, Delhi
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dear pay commission recommendation is different but we will also get amendement very soon in payment of gratuity act,tks j s malik
From India, Delhi
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From India, Delhi
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Milind Shende
Friend,
According to the recent amendment made to the Payment of Gratuity Act, the maximum amount payable to an employee is Rs 3.5 lakh provided he completes a continuous period of 5 years under the same employer. The provisions of income tax are not applicable for gratuity, but if an employee deposits the said amount in any bank, the interest payable on the gratuity amount is liable for income tax deduction.
NVRao
From India, Hyderabad
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Friend,
According to the recent amendment made to the Payment of Gratuity Act, the maximum amount payable to an employee is Rs 3.5 lakh provided he completes a continuous period of 5 years under the same employer. The provisions of income tax are not applicable for gratuity, but if an employee deposits the said amount in any bank, the interest payable on the gratuity amount is liable for income tax deduction.
NVRao
From India, Hyderabad
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Which amendment took place to limit the gratuity to Rs. 3.5 lakhs? Because if that is the case, companies are still providing gratuity based on 8.33% of the base salary, which will exceed the mentioned limit.
Regards,
Jimmy Chauhan
From India, Mumbai
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Regards,
Jimmy Chauhan
From India, Mumbai
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I would like to know that I was officially relieved from a private school after completing 13 years. However, the management didn't settle any gratuity and earned leave surrenders encashment. Is there any method to get gratuity and earned leave encashment? Please advise me.
Balu
From India, Pondicherry
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Balu
From India, Pondicherry
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc