- Section 10(10) (iii) deals specifically with gratuity provisions whereas MSR is a monetary reward. It would be wholly taxable.
Exemption of Mentorious Service Reward at the time of Retirement/superannuation as part of Gratuity
An employee from Tamilnadu Electricity Board Employees Co-operative Credit Society Ltd has retired after servicing 28 years of service. The Society is not Government office. The main objective of the Society is that providing loan to the TN State Electricity Board employees without security at nominal rate of interest and recover the loan on monthly basis from their salary. At the time of retirement, the said employee has received the followings from the society:- A). An amount of Rs. 10.20 Lakhs as "Gratuity" under the provisions of Gratuity Act 1972 and, B). An amount of Rs. 2.50 Lakhs as "Mentorious Service Reward"(MSR) Pl note that the said MSR was paid by the Society on the interest earned from the Staff Welfare Fund/Deposit. Now, the Query is that the said Mentorious Service Reward can be exempted under the provisions of the Section 10(10)(iii) of the Income Tax ACt 1961 or any other provisions of the said Act. Pl advise
Asked 5 years ago in Income Tax
Pl also note that the said employee was retired on 31.01.2020. Pl do the needful to expedite your opinion.
Asked 5 years ago
Dear Mr Vivek Kumar Arora Thanks for your reply. Can you pl advise is there any provision is available relating to Income Tax to exempt the Mentorious Service Reward received by the employee Thanks K Sivakumar
Asked 5 years ago
Dear Sir,
Hope you are doing well !!
No, it is not covered u/s 10(10)(iii) of the Income Tax Act 1961.
Hence, it would be fully taxable.
Mentorious Service Reward cannot be exempted under the provisions of the Section 10(10)(iii) of the Income Tax Act 1961 as this section only covers gratuity. There is no other provision under income tax act which exempts this amount.
- All monetary rewards are fully taxable. No such provision.
As per my understanding, there is no provision is available relating to Income Tax to exempt the Mentorious Service Reward received by the employee.
It would be fully taxable.
Please explain the proper nature of this meritorious service reward.
Technically there is no such thing exempt under any provision of section 10. May be we can decide based on its nature and reason for which it has been given.
There are various income exempt under section 10 which is amount received under VRS scheme or leave encashment etc.
If its just similar to nature of bonus it shall be taxable.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
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