The government on Wednesday said that it has doubled the income tax exemption limit for gratuity to Rs 20 lakh from the existing Rs 10 lakh, A step That benefit Lakhs of salaried employees. The Labor Ministry said in a statement that the Finance Ministry has increased income tax exemption limit to Rs 20 lakh under section 10 (10) (III) of Income Tax Act, 1961.
This step benefit to those who are now retiring as well as those who retired over the last 12 month.
"Ministry of Finance has enhanced the income tax exemption for gratuity under Section 10 (10) (iii) of the Income Tax Act, 1961 to Rs 20 lakhs," a labour ministry statement said.
Ministry of Labour and Employment Santosh Kumar Gangwar said in the statement that this move will benefit the employees of the public sector and others who are not covered under the provisions of the Gratuity Act, 1972. He also thanked Finance Minister Arun Jaitley for this. Those who are working in government and organized sector and the employees who come under the purview of gratuity law, tax-free gratuity limit has already been increased to Rs 20 Lakh.
Employees those will get this benefit scheme
Gratuity law applies to all employees who work in an organization where there are 10 or more employees in a year. Before increasing the tax exemption limit, the law was amended to double the tax exemption limit for all employees. The Labor Ministry had said that it will be implemented from March 29, 2018. The government announces tax rebate on gratuity after 11 months of notification being issued by the government. This will increase the burden of paperwork for those who retired on March 31, 2018.
When One gets the gratuity?
• To get gratuity, Employees must be employed for 5 consecutive years in any institute.
• After this, gratuity money is also available when leaving or retirement, death or disease or disability.
• To provide gratuity amounts to death or disability, it is not necessary to complete 5 years of service.
• In case of death, the gratuity amount will be received by his nominee, if no nominee, the amount will be given to his successor.
How many days It takes to get gratuity?
•There is a provision of giving gratuity within 30 days in case if employee leave the job or get retire, die or disability.
• If one does not get gratuity under the prescribed period, then the employer will have to pay the gratuity amount with the interest fixed by the government.