payment of gratuity act 1972

Salary – Tax Treatment of Gratuities

Income Tax - The word ‘Gratuity’, has not been defined in the Income-Tax Act, 1961(the Act). In the absence of any definition of ‘Gratuity’ in the Act, its meaning as provided in the dictionaries has to be referred to. The word ‘Gratuity’ has been variously defined in the Advanced Law Lexicon by P.R. Aiyar. The aforesaid definition is to b...

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Procedure of Approval of Gratuity Funds under Income Tax Act,1961

Income Tax - Section 2(5) of the Income Tax Act, 1961 defines an ‘approved gratuity fund’ as ‘a gratuity fund which has been and continues to be approved by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the rules contained in Part C of the Fourth Schedule’. In order to get ...

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Taxability of Enhanced Gratuity received after retirement

Income Tax - Gratuity is one of the retirement / separation dues paid to the employees. An employee becomes eligible for gratuity after rendering minimum service of 5 years in an organization (subject to certain exceptions) The exemption for gratuity from tax is covered under Sec 10(10) of income tax Act 1961. Any Gratuity received during service is [...

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Formation of An Approved & Registered Gratuity Trust

Income Tax - Indian and Multinational Companies form Gratuity Trust in terms of Part C of Fourth Schedule of IT Act, 1961 for getting tax benefits available under Section 36 (1) (v) & Section 10 (25) (iv) of the Income Tax Act, 1961. These 2 Tax Benefits Are Not Available To Companies, If They Make The Provision Of […]...

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Suspension of Labour Laws amid COVID-19

Income Tax - With the aim to boost economy amid the lockdown due to emergence of COVID-19, several state governments have decided to suspend most of the labour laws in their respective state via ordinance. This has been done with an aim to give curb the effects of lockdown on Indian economy and provide employers with more flexibility […]...

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Enhancement of Gratuity Limit with effect from 29/03/2018

Income Tax - The Government has issued Notification the same day wherein gratuity limit has been increased from Rs.10 lakhs to Rs.20 lakhs under the Payment of Gratuity Act, 1972....

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Payment of Gratuity (Amendment) Act, 2018 brought in force on 29th March, 2018

Income Tax - Decision:The Payment of Gratuity (Amendment) Bill, 2018 has been passed by Lok Sabha on 15th March, 2018 and by the Rajya Sabha on 22nd March, 2018, has been brought in force on 29th March, 2018. Background: The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons.  The main purpose for enacting […]...

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Payment of Gratuity (Amendment) Bill, 2018 passed by Parliament

Income Tax - The Payment of Gratuity (Amendment) Bill, 2018 has been passed by parliament today. The bill ensures harmony amongst employees in the private sector and Public Sector Undertakings/Autonomous Organizations under Government who are not covered under CCS (Pension) Rules. These employees will be entitled to receive higher amount of gratuity a...

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Payment of Gratuity (Amendment) Bill, 2017 introduced in Lok Sabha

Income Tax - Clause 3 of the Bill seeks to amend the provision relating to calculation of continuous service for the purpose of gratuity in case of a female employee who has been on maternity leave....

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Govt may increase Gratuity ceiling to Rs. 20 Lakh for Private Sector Employees

Income Tax - The present upper ceiling on gratuity amount under the Act is Rs. 10 Lakh. The provisions for Central Government employees under Central Civil Services (Pension) Rules, 1972 with regard to gratuity are also similar. Before implementation of 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972 was Rs. 10 Lakh. However, w...

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SC on entitlelment of Gratuity U/s. 4(5) of Payment of Gratuity Act, 1972

BCH Electric Limited Vs Pradeep Mehra (Supreme Court) - BCH Electric Limited Vs Pradeep Mehra (Supreme Court) In a notable judgment in the field of gratuity law, the Supreme Court held that Section 4(5) of the Payment of Gratuity Act, 1972 will apply only when there are alternative options for the employee under the Act and under the terms of contract wi...

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State is employer under Gratuity Act for teachers/employees of aided educational institutions

Ambika Mission Boys Middle School Vs State of Chhattisgarh (Chhattisgarh High Court) - Ambika Mission Boys Middle School Vs State of Chhattisgarh (Chhattisgarh High Court) (i) The State would be employer within the definition of Payment of Gratuity Act, 1972 for the teachers/employees of aided educational institutions. (ii) There cannot be unjustified classification between the two cl...

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Death-cum-retirement gratuity not payable until conclusion of departmental enquiry or judicial proceedings pending

Shivagopal Vs State of U.P (Allahabad High Court) - Shivagopal Vs State of U.P (Allahabad High Court) (i) A government employee is not entitled to death cum retiral gratuity unless the conclusion of the departmental proceedings or the enquiry by the Administrative Tribunal or judicial proceedings which includes both civil and criminal. (ii) The law a...

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Disallowance cannot be made for provision for gratuity for mere non-payment

Thiruvalla East Co-operative Bank Ltd. Vs ITO (ITAT Cochin) - Disallowance under section 43B could not be done  in respect of provision for gratuity made for the benefit of the employees for the reason that no actual payment was made....

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Teachers are Entitled to Gratuity: SC

Birla Institute of Technology Vs The State of Jharkhand & Ors. (Supreme Court of India) - In the light of the amendment made in the definition of the word 'employee' as defined in Section 2(e) of the Act by Amending Act No. 47 of 2009 with retrospective effect from 03.04.1997, the benefit of the Payment of Gratuity Act was also extended to the teachers from 03.04.1997....

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Gratuity exemption u/s Section 10(10)(iii) raised to ₹ 20 lakhs

Notification No. 16/2019 [S.O. 1213(E)] - (08/03/2019) - Govt increases Gratuity exemption limit u/s Section 10(10)(iii)  to ₹ 20 lakhs from existing Rs. 10 Lakh vide Notification No. 16/2019 dated 8th March, 2019....

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President assents Payment of Gratuity (Amendment) Act, 2018

NO. 12 OF 2018 - (29/03/2018) - (1) This Act may be called the Payment of Gratuity (Amendment) Act, 2018. (2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint....

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Govt notifies maximum maternity leave of 26 weeks for Gratuity

Notification No. S.O. 1421 (E) - (29/03/2018) - Central Government hereby specifies for the purposes of the said clause that the total period of maternity leave in the case of a female employee shall not exceed twenty-six weeks....

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Payment of Gratuity (Amendment) Act, 2018 applicable from 29.03.2018

Notification No. S.O. 1419(E). - (29/03/2018) - Central Government hereby appoints the 29th day of March, 2018 as the date on which Payment of Gratuity (Amendment) Act, 2018 shall come into force....

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Govt. increases maximum gratuity limit to Rs. 20 Lakhs

Notification No. S.O. 1420 (E). - (29/03/2018) - Government vide notification S.O. 1420 (E) dated 29.03.2018 increased the limit of amount of gratuity payable to an employee under sub-section (3) of section 4 of the Payment of Gratuity Act, 1972 (39 of 1972) from from the existing limit of Rs. 10 Lakh to Rs. 20 Lakhs....

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Recent Posts in "payment of gratuity act 1972"

Salary – Tax Treatment of Gratuities

The word ‘Gratuity’, has not been defined in the Income-Tax Act, 1961(the Act). In the absence of any definition of ‘Gratuity’ in the Act, its meaning as provided in the dictionaries has to be referred to. The word ‘Gratuity’ has been variously defined in the Advanced Law Lexicon by P.R. Aiyar. The aforesaid definition is to b...

Read More
Posted Under: Income Tax |

Procedure of Approval of Gratuity Funds under Income Tax Act,1961

Section 2(5) of the Income Tax Act, 1961 defines an ‘approved gratuity fund’ as ‘a gratuity fund which has been and continues to be approved by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the rules contained in Part C of the Fourth Schedule’. In order to get ...

Read More
Posted Under: Income Tax |

Taxability of Enhanced Gratuity received after retirement

Gratuity is one of the retirement / separation dues paid to the employees. An employee becomes eligible for gratuity after rendering minimum service of 5 years in an organization (subject to certain exceptions) The exemption for gratuity from tax is covered under Sec 10(10) of income tax Act 1961. Any Gratuity received during service is [...

Read More
Posted Under: Income Tax |

Formation of An Approved & Registered Gratuity Trust

Indian and Multinational Companies form Gratuity Trust in terms of Part C of Fourth Schedule of IT Act, 1961 for getting tax benefits available under Section 36 (1) (v) & Section 10 (25) (iv) of the Income Tax Act, 1961. These 2 Tax Benefits Are Not Available To Companies, If They Make The Provision Of […]...

Read More
Posted Under: Income Tax |

Suspension of Labour Laws amid COVID-19

With the aim to boost economy amid the lockdown due to emergence of COVID-19, several state governments have decided to suspend most of the labour laws in their respective state via ordinance. This has been done with an aim to give curb the effects of lockdown on Indian economy and provide employers with more flexibility […]...

Read More
Posted Under: Income Tax |

Salary Income – Answer to Common issues

section 17​​ of the Income-tax Act defines the term salary. However, not going into the technical definition, generally whatever is received by an employee from an employer in cash, kind or as a facility [perquisite] is considered as salary....

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Posted Under: Income Tax | ,

Section 4(5) of Gratuity Act Applies only when there are options

Section 4(5) of the Gratuity Act applies only when there are options for the employee under the Act and under contract with employer: Supreme Court  APEX COURT DECISION IN THE MATTER OF BCH ELECTRIC LIMITED VS. PRADEEP MEHRA & ANOTHERS [CIVIL APPEAL NOS. 2379 TO 2382]  The Hon’ble Apex Court held that Section 4(5) of […]...

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Posted Under: Income Tax |

SC on entitlelment of Gratuity U/s. 4(5) of Payment of Gratuity Act, 1972

BCH Electric Limited Vs Pradeep Mehra (Supreme Court)

BCH Electric Limited Vs Pradeep Mehra (Supreme Court) In a notable judgment in the field of gratuity law, the Supreme Court held that Section 4(5) of the Payment of Gratuity Act, 1972 will apply only when there are alternative options for the employee under the Act and under the terms of contract with the employee. […]...

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Gratuity – Legal Provisions and Taxation

ratuity is a reward for long and meritorious service. In 1972 the government passed the Payment of Gratuity Act that made it mandatory for all employers with more than 10 employees to pay gratuity. Gratuity shall be payable to an “employee” on the termination of his employment...

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Posted Under: Income Tax | ,

State is employer under Gratuity Act for teachers/employees of aided educational institutions

Ambika Mission Boys Middle School Vs State of Chhattisgarh (Chhattisgarh High Court)

Ambika Mission Boys Middle School Vs State of Chhattisgarh (Chhattisgarh High Court) (i) The State would be employer within the definition of Payment of Gratuity Act, 1972 for the teachers/employees of aided educational institutions. (ii) There cannot be unjustified classification between the two classes of teachers/employees for payment ...

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