NEW DELHI: The government on Wednesday said that it has doubled the income tax exemption limit for
gratuity
to Rs 20 lakh, a move that will benefit lakhs of salaried employees,
who are now retiring as well as those who retired over the last 12
months.
“Income tax exemption for gratuity under section 10(10)(iii) of the
Income Tax Act has been
enhanced to Rs 20 lakh. Would benefit all PSU
employees and other employees not covered by Payment of Gratuity Act,”
finance minister
Arun Jaitley tweeted. The government was, however, silent on the date from which the exemption would be applicable.
Gratuity Act applies to all employees working in an organisation that
employs 10 or more employees during a year. The higher exemption
follows an amendment to the law that allowed for doubling the ceiling
for all employees, which the labour ministry said was effective March
29, 2018.
The announcement on tax exemption, which has come 11 months after the
notification, may increase the paperwork for those who retired till
March 31, 2018.