Applicability of tds

The Gratuity exemption limit has been enhanced to Rs.10/lacs. Up to this limit it is not taxable. Above it the employer may at its pleasure subject to tax treatment.

The ceiling of Rs. 10  lakh applies to the aggregate of gratuity received from one or more employers in the same or different years.

Gratuity received by an employee on his retirement is taxable under the head “Salary” and gratuity received by the legal heir is taxable under the head” Income from Other Sources”.

The Central Board of Direct Taxes has approved notification of ten lakh rupees as the maximum amount of gratuity entitled to exemption under sub-clause (iii) of clause (10) of section 10 of the Income Tax Act 1961.

The notification will be applicable to employees who retire, or become incapacitated before retirement, or expire, or whose services are terminated, on or after the 24th May 2010.

DSM/BY/GN-194/10

Notification No. 43/2010 [F.No.200/33/2009-ITA.I], dated 11-6-2010

In exercise of the powers conferred by sub-clause (iii) of clause (10) of section 10 of the Income-tax Act, 1961 (43 of 1961), and in supersession of Ministry of Finance, Department of Revenue, notification no. S.O. 287 dated the 20th January, 1999 the Central Government, having regard to the maximum amount of any gratuity payable to its employees, hereby specifies ten lakh rupees as the limit for the purpose of the said sub-clause in relation to the employees who retire or become incapacitated prior to such retirement or die on or after the 24th day of May, 2010 or whose employment is terminated on or after the said date.

Thank you Mr.Kumar Doab for the reply. My query is not applicability of TDS on Gratuity. My query is whether it will attract TDS u/s 194C applicable to supply of contract labour.

The query was read as posted:

"whether TDS has to be deducted on the amount paid to contractor for payment of gratuity to contract labour? '

Regret that the information desired by you could not be posted.

Let us look for the valuable advice of members and experts on information sought by you in your latest post.