Regarding gratuity

Gratuity may be one of the components of your CTC (cost to company). It is taxed under the head Income from Salaries. Some portion of gratuity received is exempt from tax as per Section 10(10) of the Income Tax Act.
Rules relating to Gratuity which are applicable to an Employer are set out in Payment of Gratuity Act 1972.

What is this establishment; Private or Government?

The Gratuity payment pertains to which period?

 

 

What was last drawn salary: Basic+DA......

The employee worked for how many years & months?

Receiving Gratuity of Rs.25Lakh under what circumstances? As per my knowledge the maximum limit of gratuity is Rs.10 Lakh under the Gratuity Act. Now the govt. has proposed to amend the provision with enhancing the ceiling of maximum amount under the Act from Rs.10 lakh to Rs.20 lakh. And for central government employees the enhanced amount ceiling of Rs.20Lakh was made effective from January 1, 2016.

Any gratuity received by an employee of the Central Government, State Government or local authority, on death or retirement is fully exempt from tax act but it is taxed under the head Income from Salaries. Some portion of gratuity received is exempt from tax as per Section 10(10) of the Income Tax Act. As said above.

It seem to be tax free.

 

 gratuity received by the legal heir (or) nominee is not taxable if the gratuity becomes due/sanctioned after the death of the employee.

ITAT Madras Bench in its decision in the case of ‘Smt L K Thangammal vs ITO.’ Dealing with this situation, the tribunal held that “gratuity will be includible in the assessment of the legal representative, only if it had accrued to the deceased before death. The right to receive gratuity arose on account of death and became payable thereafter and hence it was not includible in the widow's hands as the legal representative of the deceased.”  gratuity received by the legal heir (or) nominee is not taxable if the gratuity becomes due/sanctioned after the death of the employee.

ITAT Madras Bench in its decision in the case of ‘Smt L K Thangammal vs ITO.’ Dealing with this situation, the tribunal held that “gratuity will be includible in the assessment of the legal representative, only if it had accrued to the deceased before death. The right to receive gratuity arose on account of death and became payable thereafter and hence it was not includible in the widow's hands as the legal representative of the deceased.” 

 

Thanks for sharing in the forum Mr. Rajendar K Goyal.

Also post the event of death was while employee was in service or later.

Income Tax Appellate Tribunal - Madras

Smt. L.K. Thangammal vs Third Income-Tax Officer 

 

https://indiankanoon.org/doc/65824/