• Tax exemption calculation on gratuity

I have employement history of 10 years.

In 2019 i had changed company and got gratuty for the service of 4 years and 8 months.

That company was not covered under payment of gratuty act 1972.

For previous employments i had not received gratuity as i had not completed 5 years of service.

Employer 1: 3.5 yrs Mumbai (no gratuity)
Employer 2: 1.5 yrs Mumbai( no gratuity)

Employer 3: 4 yrs 8 months (got gratuity)

Now can i use previous 5 years of employer 1 and 2 while calcuting exemption on gratuity received from employer 3.
Asked 4 months ago in Income Tax

- Yes you can include them. In your case no. of years of service for calculation of gratuity exemption would be 10 years. Period of employment with former employers is included provided gratuity was not paid by former employers. Assuming 0.5 years is six months otherwise it would be 9 years.

 

For detailed discussion, please contact telephonically.

Vivek Kumar Arora
CA, Delhi
4079 Answers
346 Consultations

5.0 on 5.0

Hi

 

Gratuity exemption shall be provided as the employment with last company will be considered as 5 years (6months or more are rounded off to 1).

 

The amount of gratuity exemption would be:

1. Amount of gratuity

2. 20 lacs

3. Last drawn salary x ½ x No. of years of service

No. Of years of service here would exclude and no. Of months. So in your case, it would be 4 only.

 

Lakshita Bhandari
CA, Mumbai
5475 Answers
551 Consultations

5.0 on 5.0

Hi

 

1. Yes you can do so.

Amount of gratuity will be lower of 

1. Amount of gratuity

2. 20 lacs

3. Last drawn salary x ½ x No. of years of service

Karishma Chhajer
CA, Jodhpur
2391 Answers
22 Consultations

5.0 on 5.0

No, Gratuity is calculated for continuous service under 1 employer only.

Brijendra Tripathi
CA, Lucknow
143 Answers
3 Consultations

5.0 on 5.0

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