payment of gratuity act 1972 articles

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...

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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 ...

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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 [...

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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 […]...

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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 […]...

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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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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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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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Why Qualified Actuary needed to compute Gratuity Liability of School / University

Why Actuarial Services of A Qualified Actuary is needed for computation of Gratuity Liability by Private Schools & Private Universities at Financial year end ? This article is in continuation with my earlier article “Payment of Gratuity Act is fully applicable to Teachers in Schools“. This article is attempt to give th...

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Payment of Gratuity Act is fully applicable to Teachers in Schools

This article is prepared to create awareness amongst CA’s, Accounting/Finance Personnel & Management of Schools about Supreme Court Judgment dated 07.03.2019 about Eligibility of Teachers in Schools for Gratuity Benefits under the ‘Payment of Gratuity Act 1972′. This article will also give information about ‘Me...

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Posted Under: Income Tax |

Income Tax Exemption in Respect of retirement benefits

Article discusses Tax Treatment of Various retirement benefits i.e Gratuity, Leave Encasement, Commuted Pension, Uncommuted Pension, Statutory Provident Fund, Recognised Provident Fund and Unrecognised Provident Fund. ...

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Accounting treatment of increase in liability due to enhancement of gratuity ceiling

This FAQ on accounting treatment of increase in liability on account of enhancement of the gratuity ceiling from Rs. 10 lakhs to Rs. 20 Lakhs due to Payment of Gratuity (Amendment) Act 2018 (vide notification no. S.O. 1420 (E) dated March 29, 2018) has been issued by the Accounting Standards Board (ASB) of the Institute of Chartered Accou...

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Gratuity Exemption Limit Rs. 20 lakhs | Big Relief to salaried Tax Payers

Before implementation of seventh Pay Commission, the ceiling under CC S (Pension) Rules, 1972 was Rs. 10 lakh which was raised to Rs. 20 lakhs by seventh Pay Commission....

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Benefits of Compulsory Insurance/Approved Gratuity Trust for Gratuity Benefits of Employees for Companies with Employee Strength 10 or More

This article is attempt to give more clarity about the Gratuity Benefits, Factors increasing the quantum of Gratuity Benefits Exponentially and Benefits of Compulsory Insurance/Approved Gratuity Trust for Gratuity Benefits of Employees for Companies with Employee Strength 10 or More...

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Factors affecting Gratuity Benefits, Accounting & Taxation of Gratuity Benefits

Gratuity Benefits, Factors affecting Gratuity Benefits, Accounting requirement of Gratuity Benefits, Taxation benefits available to companies in pay as go option and Funding Option and Roll of a Gratuity Trust fund consultant in formation of an Approved Gratuity Trust. This article is an attempt to give more clarity about Gratuity Benefit...

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Compulsory Gratuity Benefit Insurance & Approved Gratuity Trust Formation Process

An Article on requirement of Compulsory Insurance for Gratuity Benefits and Process of Formation of Approved Gratuity Trust Gratuity being an important retirement benefit to employees in the Indian context, is relevant for all organizations (i.e. MNC’s, Schools and Other business entities) having more than 10 employees . Since an employ...

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Tax Treatment of Income from Salary in Brief

Salary is defined to include: a) Wages b) Annuity c) Pension d) Gratuity e) Fees, Commission, Perquisites, Profits in lieu of or in addition to Salary or Wages f) Advance of Salary g) Leave Encashment h) Annual accretion to the balance of Recognized Provident Fund i) Transferred balance in Recognized Provident Fund j) Contribution by Cent...

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Gratuity- Taxation benefits available to company in Pay as go Option & Funding Option

This article is in continuation to my earlier article ‘Requirement of Accounting and Funding Arrangement for Gratuity Benefits‘ in this article we will understand about ‘Taxation benefits available to company in Pay as go Option & Funding Option‘ Gratuity is a statutory right of employee whoever completes 5 yea...

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Posted Under: Income Tax |

Requirement of Accounting & Funding Arrangement for Gratuity Benefits

This article is an attempt to give clarity about requirement of Accounting and Funding Arrangement for Gratuity Benefits. Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, -...

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Form U- Abstract of Payment of Gratuity Act, 1972

FORM ‘U’ Abstract of the Payment of Gratuity Act, 1972 1. EXTENT OF THE ACT The Act extends to the whole of India: Provided that in so far as it relates to plantations or ports, it shall not extend to the State of Jammu and Kashmir [Sec 1(2)] 2. TO WHOM THE ACT APPLIES The […]...

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Gratuity: Eligibility Criteria, Income Tax Exemption Limit & Calculation

‘Gratuity’ in simple term is a reward given by the employer to his employee at the time of his retirement / resignation / termination / death. Present article contains the answer to the basic gratuity related questions like what is the eligibility criteria of gratuity, what is the gratuity calculation formula and what is the […...

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Tax Free Gratuity limit increased from Rs.10 Lac to Rs.20 Lac

Now the CBDT vide Notification No. 16/2019/F. No. 200/8/2018-ITA-I dated 8th March, 2019 has specified twenty lakh rupees as the limit for the purposes of Section 10(10)(iii) of the Income Tax Act, 1961 in relation to the employees who retire or become incapacitated prior to such retirement or die on or after the 29th day of March, 2018...

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What is Gratuity? Is Income Tax Exempted on Gratuity?

What is Gratuity? Gratuity is a lump sum that a company pays when an employee leaves an organization and is one of the many retirement benefits offered by a company to an employee. In India, gratuity rules and requirements are set out under the Payment of Gratuity Act, 1972. An employer may also choose to […]...

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ग्रेच्युटी की कितनी रकम टैक्स के दायरे में नहीं आती है?

मोहन एक अक्टूबर, 2018 को रिटायर हुए हैं. उनकी ग्रेच्युटी की रकम 20 लाख रुपये से ज्यादा है. लेकिन, संस्थान ने बताया है कि उन्हें केवल 10 लाख ...

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Gratuity Act Amendment – Grievance of majority employees

Bhadkamkar A V Date: 15-02-2019 Gratuity Act Amendment – Grievance of majority employees. The maximum gratuity payable under The Payment of Gratuity Act and exempted under The Income Tax Act is raised from Rs. 10.00 lacs to Rs.20 lacs from 29-03-2018. Apparently on this decision all employees will rejoice. But as it happens always...

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Posted Under: Income Tax |

Guide to Approved Gratuity Fund

Gratuity is a lumpsum amount paid by an employer to its employees at the time of their retirement, superannuation or death. It is a way by which an employer expresses its thankfulness to its employees for remaining in continuous service....

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Posted Under: Income Tax |

Taxation of Gratuity

People employed in organised sector and with governments receive gratuity at the time of their retirement/death. Gratuity also becomes payable on termination of services. The gratuity becomes payable only if one has service for continuous five years with the same employer. Though many of your might have received gratuity but most of you ...

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Know About Payment of Gratuity Act 1972

Gratuity is lump sum payment made by an employer to an employee in consideration of his past service when the employment is terminated. It is paid for long and meritorious services rendered by an employee. With enactment of Payment of Gratuity Act, 1972, gratuity payment has become mandatory and in case of non application of gratuity Act...

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Posted Under: Income Tax |

How to Calculate Gratuity and its Tax Treatment

As per the Act, the gratuity amount is 15 days’ wage multiplied by the number of years put in by you. Here wage refers to basic salary plus dearness allowance. Take the monthly salary drawn by you last (basic + dearness allowance) at the time of resi...

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Analysis of Payment of Gratuity (Amendment) Bill 2017

The much waited Social security measure, Payment of Gratuity (Amendment) Bill, 2017 was passed by Rajya Sabha on 22nd March, 2017 after it was passed in the Lok Sabha on 15th March, 2018. ...

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All about Payment of Gratuity Act 1972

The Payment of Gratuity Act 1972:- Gratuity is a voluntary Payment made by the employer to the employee in recognition of continuous, meritorious services and sincere efforts by the employee towards the organization.It is governed under the Payment of Gratuity Act 1972.It is an Act to provide for a scheme for the payment of gr...

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Revised Gratuity Exemption Limit for employees covered under the Payment of Gratuity Act, 1972

In respect of other employees, it is to be determined whether they receive gratuity from an employer covered under the Payment of Gratuity Act, 1972 or not. It is pertinent to note that every gratuity payment received by an employee is not exempt from tax per se. In this context, it is important to note the provisions of the Payment of G...

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Posted Under: Income Tax |

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