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TMI Blog2013 (7) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... med thereunder (hereinafter referred to as the 'Act' and the 'Regulations'). In Regulation 16 of 1989 it had been provided that anything not specially provided in these regulations, in the eventuality of not being specially provided, the Punjab Civil Services Rules on the question of gratuity shall be applicable to the employees mutatis mutandis. As per the prevailing provisions upon retirement the petitioners were held entitled to gratuity to the maximum limits of ₹ 3.5 lakhs but after the applicability of the Fifth Pay Commission the maximum limit of payment of gratuity was increased from ₹ 3.5 lakhs to ₹ 10 lakhs. The petitioners were thus held entitled to the remaining amount of gratuity after deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 10 of the Income Tax Act. Section 10 of the Income Tax Act is also extracted herebelow for ready reference:- Section 10 of the Income Tax Act, 1961 Incomes not included in total income In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included. (1) to (9) xxx xxx xxx (10)(i) Any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services(Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so specified: Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income tax under this clause shall not exceed the limit so specified as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years. It is evident from the reading of the aforesaid provision of law that the gratuity paid to the petitioners is not contemplated under the head of income so as to render it taxable. During the course of proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 10,00,000/-. Now the exempted amount from tax is only ₹ 10,00,000/-. If an employee of the Punjab Government receives an amount of gratuity upto ₹ 10,00,000/- he will not have to pay any tax on this amount. This will apply to the employees of the Punjab School Education Board as well in view of Regulation 16 reproduced above. It is, however, clarified that if an employee receives ₹ 11 lakh on account of gratuity, he will have to pay tax on Rs.one lakh. This is by way of illustration only. Such is not the case here. It is further clarified that any arrears/payments of the retirees should not be withheld and the retiree may not be forced to pay any income tax on payment of gratuity upto ₹ 10 lakh. The show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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