deduction of Income Tax on gratuity

retirement gratuity of ten lac is taxable?
i am retired on 30-04-10
r c srivastava lucknow

The exemption limit of Gratuity is regulated by Sec 10(10) of the Income Tax Act.
Sec 10(10)(ii) reads as follows,
" (ii) any gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972), to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of section 4 of that Act"

The limit laid down under section 4(3) of the Payment of Gratuity Act, 1972 [as amended by the Payment of Gratuity (Amendment) Act, 1998, w.r.e.f. 24-9-1997] was Rs. 3,50,000. This has now been amended to Rs. 10,00,000. The notification in this regard has been issued on 25th May, 2010.

As per FCI's internal circular issued in 1996, the FCI DCRG Rules had been repealed and all employees brought under the Payment of Gratuity Act (except of course those who continue to be GoI employees by virtue of Sec 12A of FCI Act)

In view of the above, Gratuity received till 24th May 2010 is exempted upto Rs.3.50 Lakhs. gratuity received on or after 25th May is exempt upto Rs.Rs.10 Lakhs. (This is applicable to all employees of FCI- CDA, IDA, Dept Labour etc)

sir
my gratuity is not paid me till now though retired on 30-04-10.
if it is received after 25th may shall it be exempted for tax.
pl elaborate
tx & regds
rcs

The circular on taxability of Gratuity issued by Hqrs. Finance Division can be downloaded from the following link
Gratuity Taxation circular

nu_lee2003 wrote:sir
my gratuity is not paid me till now though retired on 30-04-10.
if it is received after 25th may shall it be exempted for tax.
pl elaborate
tx & regds
rcs

If payment bill has not been prepared, then exemption would be available.

I am glad to inform all members that now as per CBDT
IT is exempted on entire amt of gratuity i.e 10 lacks.
by the income tax deptt G O I .
tx & regds
r c srivastava
b 1357 indira nagar
lucknow
09415087909
email, rcsrivastava_s@indiatimes.com

thanks sir for valuable information. our association efforts for
officers is admirable.

DEAR SIR
I AM RETIRED ON 30TH APRIL 2010.
NO GRATUITY IS BILLED ME TILL DATE.[/b]RO LKO IS SEEKING CLARIFICATION FROM HQS.NO REPLY RECEIVED.
KINDLY ARRANGE TO SEND NECESSARY INSTRUCTIONS TO GM(U.P).
ALL RETIRED OFFICERS ARE FACING HARDSHIP FOR PAYMENT OF GRATUITY.
PL REQUEST SRI J. S. TULI TO INTERVEN.
TX AND REGARDS
RCS LKO

^^^
Please indicate the date of the retirement order issued by FCI office. Also please indicate whether you are in CDA or IDA.

1-dt of retirement order no A/25/retire EI/catII/april2010.Dt. 30--4-2010
2- I am on IDA pattern
3-?
rcs lko

As per the provision of the IT Act, the tax liability vests on the date the income becomes due or is received, whichever is earlier.

Since the retirement order was issued on 30th April, 2010, the income became due on that date itself (even if the same is yet to be disbursed) as per the tax law as applicable as on that date. Hence, the exemption would be only upto 3.50 lakhs.

However, in the case of a person who has being relived (instead of retired) on 30th April 2010 and the retirement order is actually issued after 25.05.2010, he can claim the benefit of exemption upto 10 lakhs as the income became due only on the issue of the retirement order.