Legal Advice

Can We Claim Gratuity Amount Exemption More Than Once?

This article helps provide the best guidance for an employee if the service of employment is 5 to 10 years in an organization and claim of gratuity amount more than once.

Gratuity is a type of current salary, and any money you get is included in your total income during the year underneath the heading “Income from Employment.” Lump-sum is only paid after 5 years of nonstop service with the company.

Most employees believe they can only collect gratuity occasionally or from one company. It is a complete mistake; the limitation is simply on the quantity of gratuity deduction that can be claimed, which is currently 10,00,000/- (also called the maximum of exclusion).

If gratuities are obtained from more than a company in the same year or different years, the exclusion limit is used to the gratuity total.

Suppose an appropriate solutions tip in a previous year(s) and claimed exempt status u/s 10(10) concerning gratuity previously received. In that case, the person will be eligible for this tax break, but the restriction is currently 10,00,000/-will be deducted from the amount of exemption(s) tried to claim in the previous year (s).

The filing of tax records for the fiscal year 2010-11 (March 2011) has begun. Form 16/Proof Of payment and other income information are available at online portals. It would take things across to file the federal tax return.

The online tax portals provide complete online revenue solutions for individuals ( Tax Documents + Tax Assistance + Tax Preparation ). it is advisable to see the Services Offered.

Section 10: Gratuity Exemption (10)

If an individual receives a tip while working, it is subject to taxation in the employee’s possession. However, the deduction is generally available to the following constraints if gratuities are obtained during death, resignation, or withdrawal.


Employees of The Ministry

Gratuities received by the employees of the federal government, state and local governments, or city municipalities are tax-free. Workers of Government organisations are not eligible for this deduction.

A quantity equivalent to the lowest preceding will be free from taxation in payment authorised under the Payment of Bonus Act.

  • completed x Salary accurately recently drawn x Decades of employment completed or portion thereof in addition to 6 months
  • The service charge ended up receiving: $10,000

In the event of seasonal businesses, 15 days are replaced by seven days.

Basic salary and special allowances are included in the salary. However, bonuses, incentives, overtime earnings, and other allowances are not.

A whole year is defined as a period of more than six months.

If You Have Any Other Employees

The amount equivalent to the least of the below is tax-free.

  • 10,00,000 • Gratuity ended up receiving x Average pay of last 10 months leading up to the date of departure x Finished year of employment (a quarter of a year is omitted)

Basic pay, cost-of-living allowance (to the degree it is included in pension payments), and a fraction of a percent set of commissions on sales make up the pay.

Other Tax-Related Considerations

If workers receive gratuities from more than one company in the same month or past years, the total amount exempted from tax on gratuities cannot surpass Rs. 10,000.

If a worker has previously worked for another company, the time of service with that company is considered in the computation of the “finished year of employment,” provided that no bonus is paid from that company.

It must be given to the owner’s designee or legal successor in the event of the employee’s demise. In this situation, the exclusion is determined in the same way as before, and the recipient is charged within the head of Income from other sources.

When Are Gratuities Due Under The Payment Of Gratuities Act Of 1972?

When a person leaves work after finishing at least 5 years of employment with the employer, the bonus is due – therefore, this is due.

  • After resignation (means a worker who conquers the age of withdrawal is held to be in superannuation)
  • Dismissal or departure
  • In the event of death or disability caused by an accident or sickness (the occasion limit of 5 years shall not be relevant in the case of bereavement or disablement of the worker).

Gratuity is not included in your regular monthly wage; it is only paid when one of the above circumstances occurs.

The company has the authority to refuse payment of gratuities to a worker whose services have been ended owing to misbehaviour.

The Universality Of Gratuity Under The Payment Of Provident Fund Act Of 1972

Every day in the previous 12 months, anyone working in factories, quarries, oil businesses, ports, railroads, farms, Stores & Foundations, or academic establishments with 10 or more workers is eligible for gratuities. It only applies to permanent staff, not learners or internships.

Even when a business has less than ten employees when the Act takes effect, gratuity is still relevant.

Who Is Entitled To A Provident Fund?

Lump-sum is generally compensated, but in the event of the employee’s demise, it will be paid to his nomination, which has been given to his descendants. If the nominee is a child, the child’s share must be placed with the governing power, who will spend it for the child’s advantage until adulthood.

Under the Provident fund Act, the maximum number payable is

The maximum pension for government and non-government workers is Rs 10 lakhs. The employer has the option to pay more. As stated in section 4, a worker has the right to receive more if available underneath an award or agreement with the business.

Donation Service

By submitting Form “F,” each worker must designate one or more family members, as specified by the Law, to obtain the bonus in the case of the company’s demise.


The article is well versed in knowing how and when an employee can claim for his gratuity once or more than once during his employment service for an organisation.

Also, Read:


Back to top button


Remove Adblocker Extension