tax on of gratuity payment

Querist : Anonymous (Querist) 15 June 2010 This query is : Resolved
I was working for a multi- national bank for last 10 yrs but because the bank decided to close my business vertical I was offered severance package in lieu of continous service. I accepted the severance package and left the bank on 15/05/2010.

Now on 14/06/2010 i received my gratuity amount of approx 5.50 lacs on which the bank has deducted approx 67,000 income tax (30% tax on amount above 3,50,000).

My query is that if government has recently increased to non taxable limit of gratuity payment from Rs 3.50 lacs to 10.00 lacs then am I liable to pay income tax on my gratuity amount of approx 5.50 lacs.

Please share your opinion on my query.

Thanks in anticiaption of of your quick resposne.

Kind regards
Vijay Rana

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Vineet (Expert) 18 June 2010
Its unfortunate but the enhanced limit of gratuity is is applibale wef 24-5-2010 and any person retiring or leaving prior to that date is covered by earlier limit of Rs 3.50 Lakhs only.

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