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Financial Planner - Answered on Dec 21, 2020

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
He’s an expert in income tax and wealth management.
He has completed his CFA/MBA from the ICFAI Business School.... more
Balraj.H.S Question by Balraj.H.S on Dec 21, 2020Hindi
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I have retired from service 31st Oct-2019. My company was covered under payment of gratuity act 1972.

I have received Rs 1876910/-

My company has mentioned Rs 911642/- as tax exemption and the remaining amount was taxed.

I have cross checked with the exemption limit using income tax gratuity tax calculator. it shows my tax exemption limit as Rs 1051895/-. 

My employer says you are not paid as per gratuity payment act. The company is covered under the act. I do not know other provisions of my company if any.

Please advise me the method of calculation 

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.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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