Tax on Gratuity

Gratuity is receivable at the time of retirement or on resignation from the organization after working continuously for five years. Part of this gratuity can be taxable, depending on the amount received by non government employees. Gratuity is fully exempt for "Government Employees".

This disparity is beyond ones understanding. If at all government wants to tax gratuity it should be other way round. It will discourage people looking for government services.

Its a reward which the employee gets after end of the period of employment. Employee, government or non government earns it. Most of us work for thirty or forty years thinking that its fully exempt.

Government should consider withdrawing this tax from every category of employees. more  

View all 13 comments Below 13 comments
There should be no two I-Tax slabs for the salaried people in government and private sectors, income on interest on gratuity withdrawal. more  
Lets start a petition on this. When Income tax slabs are same for both, why difference for Gratuity ? more  
after some years of Naukri Govt pays Salary from the interest of the PF we

On Mon, Dec 10, 2018 at 11:12 AM arup ratan sit <> wrote:

> now on Govt can give more and more in Terminal benefits to appease people
> and drill hole by taxing.
> they can tax on GPF withdrawl, leave encashment, communication amt of the
> Pension too
> On Sat, Dec 8, 2018 at 5:28 PM Pritam Sharma <>
> wrote:
>> more  
now on Govt can give more and more in Terminal benefits to appease people
and drill hole by taxing.
they can tax on GPF withdrawl, leave encashment, communication amt of the
Pension too

On Sat, Dec 8, 2018 at 5:28 PM Pritam Sharma <>

> more  
Discussion so far on the subject is quite enlightening and informative.

I take a clue from Mathur's post. It is appropriate to say gratuity is like a recurring deposit with a bank. When such a deposit matures, the depositor gets full maturity value and no tax is paid, except on the interest earned on the deposit. Fair enough, interest is an income and Govt taxes it when it exceeds a basic limit.

Is there an element of interest accrued in gratuity or an equivalent? If yes, let the Govt charge tax only on that part and not on whole gratuity. That would be more sensible!

Lastly, disparity shown on the basis of Govt and non-Govt employees is highly unfair and beyond any logic. Can anyone think that Govt and non-Govt employees are 2 different types of Indian Citizens? Peoples reps in Parliament may have to take up the issue and bring justice. more  
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