Notification No. 43/2010 [F.No.200/33/2009-ITA.I], dated 11-6-2010

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In 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 its 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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Category : Income Tax (25158)
Type : Notifications (15278) Notifications/Circulars (30306)

0 responses to “Section 10(10)(iii) of the Income-tax Act, 1961 – Gratuity – Gratuity exemption limit raised to Rs.10 lakhs”

  1. G.Kirubanandam says:

    Request you to clarify the following scenario:

    In our company we have paid Gratuity to our employees to the following components: BASIC + DA + INCENTIVE + Personal pay as per settlement.

    When we pay the gratuity to the employee, our Fiance department agreed to grant tax exemption to the earnings of BASIC + DA only. The rest of the components like INCENTIVE + PERSONAL PAY, they will take into account of earnings and deduct income tax. But the total gratuity is less than 10 Lakhs Rupees only. We are paying this amount under the Gratuity payment in the full and final settlement.

    Whether is this correct or not?

    Please clarify?

  2. RAJAGOPAL says:

    Is there any amendment to the notification that tax deducted for PSU employees who retired before 24/05/2010 over and above the graduity amount of rs.3.50 lakhs has been
    exonerated for refund claim from income tax dept. If this is clarified in positive, the retired employees of erstwhile period can claim tax refund from respective IT dept.
    Please clarify.

    • Sudhakar Rao says:

      Kind regards,Kindly clarify gratuity received in 2009-2010 is taxable,TDS can be claimed as gratuity tax exemption and can i get tds amount on claim from i t deptt.

  3. RAJAGOPAL says:

    Is there any amendment to the notification that tax deducted for PSU employees who retired before 24/05/2010 over and above the graduity amount of rs.3.50 lakhs has been
    exonerated for refund claim from income tax dept. If this is clarified in positive, the retired employees of erstwhile period can claim tax refund from respective IT dept.
    TAX GURU – please clarify on the latest development.

  4. RAJAGOPAL says:

    Is there any amendment to the notification that tax deducted for PSU employees who retired before 24/05/2010 over and above the graduity amount of rs.3.50 lakhs has been
    exonerated for refund claim from income tax dept. If this is clarified in positive, the retired employees of erstwhile period can claim tax refund from respective IT dept.

  5. T.P.D'Souza. says:

    What about those PSU retirees who retired after !st.Jan.2007,received 3,50,000 before 23.05.2010,at the time of retirement, and balance Gratuity and leave encashment after 23.05.2010 ? Why is IT dept.not refunding TDS ?

    • Sudhakar Rao says:

      Sir Kind regards,
      Why TDS not returning by I T Deptt.when gratuity paid on enhancement after retirement of two years later ie retired in oct.2007,enhanced gratuity paid in 2009-2010.kindly clarify pl.

  6. RHITURAJ GAUTAM says:

    when employee was died, gratuity amount as per rule is Rs 715000 olny but due to limitation Rs 350000 only was paid to the faimly of deid employee. now enhashment of 10 lac gratuity, the differance amount of Rs 365000 only also paid to the faimly of employee. Now question is raise that Rs 365000 only amount is taxable or not ? if yes or not please inform with circular to us, please.

  7. Zephyrine Goveas says:

    Gratuity of Rs.10 lakhs has been paid to central govt employees after the last pay commission and no tax has been deducted. Similarly, PSU employees have also been paid gratuity of Rs.10 lakhs but the employer has deducted tax. It is typical of Govt. notifications to contain ambiguities always. The earlier ceiling was Rs.3.50 lakhs was not taxed under gratuity act 1972. In other words, gratuity is not taxable under the Act and therefore enhanced gratuity also is not taxable. This opinion was contained in a recent article by Mr. Vikas Vasal of KPMG(17th June) in the Economic Times.

  8. vkm says:

    Why this discrimination to PSU officers who have retired before may 2010 (and worked for psu services since the last 30 years,).The gratuity of 10 lakhs is paid after deducting total tax on this amount.
    whereas our friends (who enjoys pension benafits also ) in the central govt, this amount of gratuity is tax free for full amount of 10 lakhs from 1/1/06.
    WE do hope people in the govt . will soon realise and issue notification for tax free gratuity for officer retiring before may2010.

    • Sudhakar Rao says:

      sir,good & happy Day.1-1-2007 retired.enhanced gratuity paid in 2009-2010.Tax deducted.on claim i t deptt. not honouring claim not returning TDS

  9. lal chand says:

    We fail to understand why the Government make so much fuss of creating parity in framing the laws. There was no fun in making the amendment in gratuity act from 24.05.2010 instead of 01.01.2006. High time for the Government to issue fresh notification making exemption from 01.01.2006 and avoid step motherly treatment to thousands of retired employees.

  10. IK ARORA says:

    Gratuity upto Rs. 10 lakhs is already exempted from Income Tax for Central Govt./State Govt/Local bodies ‘s employees from the date of enhanced gratuity. Employees who are covered under Gratuity Act and retiring on or after 24/05/2010 are also beneficial for exemption of income tax upto 10 lakhs. But there is no relief for thousands of employees of various PSUs who retired and got gratuity upto 10 lakhs during the period from 1/01/2007 to 23/05/2010. Ministry of Finance should issue fresh notification in this regards to give relief to thousands of employees.

    • Sudhakar Rao says:

      when all govt.central govt.employees have been exempted form date of effective of enhanced gratuity why not to PSUs.pl.extend this to PSUs also from enhanced date.

  11. A K TALWAR says:

    It is surprising that the tax exemption for enhanced gratuity for employees covered by sixth Pay Commission including Central Govt and semi-Govt employees who have retired before May2010,is not addressed.By any logic it should be implemented from the date of Govt Order on Pay Commission.The concept of enhanced gratuity was accepted by Govt on that date,which can not be ignored.

  12. Manoj Singhania says:

    This is unjustice for employees who had retire before 23.05.2010.

  13. Aaditya Bahuguna says:

    There should not be any disparity between one employee of Govt. and another of private sector. All face same hardship, same inflation, same freedom under constitution and contribute equally to the development of the country. The tax free enhanced limit of gratuity to 10 lakh should be for all uniformly w.e.f.1.1.2006. For the sake of justice all who matter and all the affected employees should unite and in one voice ensure that justice is done.

  14. R K AGARWAL says:

    Does it mean that Even for Central Governbment Employees, Gratuity beyond 3.5 Lakhs will be taxable up to 23.05.2010???

  15. K UDAYANANDAN says:

    It is very unfortunate that the Govt./PSU employees who retired before 24-05-10 are deprived from the benefit of IT relief enhanced on Gratuity payment up to Rs.10.00 which is implemented from 01-01-07 for the PSU employees. Thousands of employees retired before 24-05-10 are facing financial hardships because of the spiraling prices of essential commodities and if this IT relief is extended to them also, it will be a great relief to them.

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