Its a good news for all salaried class, the government has raised the income tax exemption limit on gratuity to Rs 10 lakh from Rs 3.5 lakh with effect from May 24.The Central Board of Direct Taxes has approved this which was being expected the day govt. announced the new ceiling of Rs 10 lacs in the month of february.
Everyone, who has retired, become incapacitated before retirement, expired or whose services have been terminated, on or after the 24th May this year can avail the benefit of a higher exemption limit on gratuity. Gratuity is the monthly payments received by a person who has worked for atleast 5 years in an organization or and gets a tax exemption under sub-clause (iii) of clause (10) of section 10 of the Income Tax Act 1961. Parliament had approved raising the limit of gratuity to be exempted from income tax. The Payment of Gratuity (Amendment) Bill, 2010, was passed by Parliament in this regard in the Budget session.
