Is Gratuity taxable when received before 5 years?

I worked for 1.5 years in a company and resigned. The company paid me gratuity of around 30,000. Is this taxable? I found some experts saying that it is not taxable as long as all the gratuities received like this (including in past if any) doesn't cross the limit as per gratuity act. In future if it crosses, then the amount above the limit is taxable. Some others are saying that the limit under gratuity act is applicable only when employee works for more than 5 years and receives gratuity.

Please clarify. Thanks in advance

asked Feb 08 '12 at 00:13 by Phani R 2216712


As amount is received before completion of five years of service with employer, it should be taxable.

answered Feb 10 '12 at 19:02 by pankaj 5.2k320

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Hi Pankaj, The company gave the Form-16 recently and in that the gratuity paid was given under the Exemption under Section 10 column. So not sure what is the rule, but i am not complaining :)
(Jul 22 '12 at 01:18) Phani R
Deduction only applies when you have completed five years of service.
(Jul 23 '12 at 16:14) pankaj

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Asked: Feb 08 '12 at 00:13

Seen: 2,002 times

Last updated: Jul 23 '12 at 16:14