Gratuity Law
Querist :
Anonymous
(Querist) 01 July 2010
This query is : Resolved
I quit the organisation on 10 May 2010. The Gratuity Act had been amended and stated that the cap had been raised from Rs. 3.5 Lacs to Rs 10 Lacs. However, as this had not been passed by the Parliament, the approach was that the payout would be actual (subject to the cap of Rs. 10 lacs) but the amount more than Rs 3.5 Lacs would be taxable.
The Grauity Amendment was passed by the Parliament and came into effect from 24 May 2010.
Now, my company is saying that since I quit before 24 May, the payment that they will make now will be taxable (as was the rule till 24th May).
Pls confirm what should be the right approach
Vineet
(Expert) 01 July 2010
Yes, the enhanced limit of Rs 10 Lakhs for exemption of tax is applicable wef 24-5-2010 only. Any person quitting prior to that date is liable to be taxed on gratuity amount exceeding Rs 3.50 Lakhs.
