Hello Sir, I have received gratuity of ra. 4.15 lakhs in FY 2022-23 upon resigning from my previous organisation, where I served for 16 years. My previous organisation had deducted TDS from the gratuity, but I beleive gratuity is tax-exempt till Rs. 20 Lakhs. Please let me know whether Iam eligible for tax exemption or not.

Ans: As per the latest amendment to Gratuity act 1972, least of the following is exempt from tax:

1. Actual Gratuity received
2. Rs. 20,00,000 (which has been hiked from Rs. 10 Lakh as per the amendment)
3. Last salary (basic + DA)* number of years of employment* 15/26

We suggest computing as per above provision and claim tax exemption.

Ans: Hello Rayees,

I understand your query about the tax exemption on the gratuity amount you're receiving as part of your monthly salary.

Gratuity is a benefit given by the employer to employees. As per the recent amendment, gratuity is now tax-exempt up to Rs 20 lakh, which is an increase from the previous limit of Rs 10 lakh. This comes under Section 10(10) of the Income Tax Act.

However, it's important to note that if an employee receives gratuity during his service, then it is fully taxable as income under the Income Tax Act, 1961. The exemption applies when the gratuity is received at the time of retirement or termination, not during the service period.

I would recommend consulting with a tax advisor or a chartered accountant to understand how this applies to your specific situation and to plan your taxes accordingly.

I hope this information is helpful to you.

Best Regards.

Ans: Hi,
I understand your concern. You have not mentioned the profession and the industry you have been into. The Act was amended in 2007. However, the amendment in 2007 was mainly to extend the benefits of gratuity to teachers.

Ans: Income above exemption limit will be taxable at slab rate.