If your family business is a partnership concern with you as a partner, the retirement funds received are not subject to tax and not in the nature of goodwill also, as held recently by the Income Tax Appellate Tribunal, Hyderabad in a recent case following the decision of the Supreme Court in the case of CIT V/s. R. Lingamallu Rajkumar.
If you are not a partner in the partnership concern or the family business is a proprietary concern, then it amounts payment of gratuity if you are an employee and the exemption available for gratuity can be claimed. However if you are receiving this amount without any formal association, the nature of association needs to be established for assessing the tax liability.
