IT exemption on Retirement Gratuity

Income Tax exemption limit for gratuity enhanced to Rs.10 lakh - Central Board of Direct Taxes approved. The government enhanced the income tax exemption limit for gratuity from Rs.3.5 lakh to Rs.10 lakh w.e.f. May 24, 2010. The Central Board of Direct Taxes has approved notification of ten lakh rupees as the maximum amount of gratuity entitled to exemption under sub-clause (iii) of clause (10) of section 10 of the Income Tax Act 1961. The notification will be applicable to employees who retire, or become incapacitated before retirement, or expire, or whose services are terminated, on or after the 24th May 2010.