Gratuity Exemption limit AY 2019-20 FY 2018-19 under Income Tax Act
Gratuity Exemption limit AY 2019-20 FY 2018-19 under Income Tax Act is given as per Section 10(10) of Income Tax Act of India
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Death -cum-Retirement Gratuity received by other employees who are covered under Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions). |
Least of following amount is exempt from tax: 1. (*15/26) X Last drawn salary** X completed year of service or part thereof in excess of 6 months. 2. Rs. 20,00,000 [Note -1] 3. Gratuity actually received. *7 days in case of employee of seasonal establishment. ** Salary = Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite |
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2. |
Death -cum-Retirement Gratuity received by other employees who are not covered under Gratuity Act, 1972 (other than Government employee)(Subject to certain conditions). |
Least of following amount is exempt from tax: 1. 1/2 X Average Salary* X Completed years of service 2. Rs. 10,00,000 [Note 2] 3. Gratuity actually received. *Average salary = Average Salary of last 10 months immediately preceding the month of retirement **Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission |
Notes
1 Section 10(10) (ii) of Income Tax Act :
. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—
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 ;
Refer Notification issued under Section 4(2) and 4(3) of Payment of Gratuity Act, 1972 : Gratuity Tax Free Limit increased to Rs 20 Lakh : Notification Dated 29.03.2018
Enhancement of Gratuity Limit w.e.f. 29.03.2018.
2. Section 10(10) (iii) of Income Tax Act :
- NOTIFICATION NO.SO 1414(E) [NO.43/2010 (F.NO.200/33/2009-ITA-I)], DATED 11-6-2010In exercise of the powers conferred by sub-clause (iii) of clause (10) of section 10 of the Income-tax Act, 1961 (43 of 1961), and in supersession of Ministry of Finance, Department of Revenue, Notification No. S.O. 287, dated the 20th January, 1999 the Central Government, having regard to the maximum amount of any gratuity payable to employees, hereby specifies ten lakh rupees as the limit for the purpose of the said sub-clause in relation to the employees who retire or become incapacitated prior to such retirement or die on or after the 24th day of May, 2010 or whose employment is terminated on or after the said date.
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