LIVE TV
ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Budget 2021
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Jobs
  • Indian Railways
  • World
    • Economy
    • Politics
    • Markets
  • videos
  • photos
  • Authors
  • More ...
    • VIDEOS
    • PHOTOS
Read in App
Business News » Personal Finance News

Income Tax: Liabilities of PF and Gratuity - All you need to know

A retired life of an individual begins with the liquidation of the post-retirement benefits such as gratuity or provident fund. However, there is one aspect that many tend to forget but is very essential is computing the tax liability. 

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
Income Tax: Liabilities of PF and Gratuity - All you need to know
Not paying the due tax can lead to several financial and legal complications and this is why it is important to know about the exact tax liability on these benefits. Pixabay
Written By: ZeeBiz WebTeam
Edited By: Prashant Singh
Updated: Thu, Aug 22, 2019
05:47 pm
New Delhi, ZeeBiz WebDesk
RELATED NEWS
PF account withdrawal: If you have withdrawn money from Provident Fund, then give information while filing tax returns, know why it is important PF account withdrawal: If you have withdrawn money from Provident Fund, then give information while filing tax returns, know why it is important
PF Status: How to check your provident fund balance through Umang App PF Status: How to check your provident fund balance through Umang App
EPFO members alert! So easy - Know PF balance amount, latest Provident Fund contribution just by SMS - Here is how EPFO members alert! So easy - Know PF balance amount, latest Provident Fund contribution just by SMS - Here is how
Employees Provident Fund: When and how much tax you have to pay on PF money Employees Provident Fund: When and how much tax you have to pay on PF money
UP EPF scam: What's next in Employees Provident Fund suspected money laundering? All you need to know UP EPF scam: What's next in Employees Provident Fund suspected money laundering? All you need to know

A retired life of an individual begins with the liquidation of the post-retirement benefits such as gratuity or provident fund. However, there is one aspect that many tend to forget but is very essential is computing the tax liability. Not paying the due tax can lead to several financial and legal complications and this is why it is important to know about the exact tax liability on these benefits. 

Here is everything you need to know about the tax liabilities with respect to PF and Gratuity:-

Tax liability on gratuity

Gratuity is a payment that an employer makes to his employee for the services provided him during his employment tenure. Mostly, gratuity is paid at the time of retirement, but if certain conditions are met, it can be paid earlier too. Any company, which has 10 or more employees on any day in the preceding 12 months is liable to pay gratuity. And if post this, the number of employees reduces, the Gratuity Act will always remain valid.

Tax Expert, Manish Gupta told Zee Business Online, ''According to rules in Payment of Gratuity (Amendment) Act, 2018, the tax-free gratuity has been increased to Rs 20 lakh, while earlier it was Rs 10 lakh only. The new rule has come into force on March 29, 2018.''

According to CA Sandeep Kanoi, for every completed year of service or part thereof, gratuity shall be exempt to the extent of fifteen days Salary based on the rate of Salary last drawn by the concerned employee. In case of any other employee, gratuity received shall be exempt subject to the following limits:

(a) The exemption shall be limited to half month salary (based on last 10 months average) for each completed year of service

(b) Rs 10 lakhs whichever is less.

Tax Liability on Provident Fund

Both the employee and the employer contribute a part of their salary to the Provident Fund account. While making a contribution, the amount contributed by the employer is tax-free if it is within the specified limit, which is 12%. If the amount contributed by the employer is more than 12%, it would be taxed under the head ‘Income from Salary‘.

The contribution towards PF can be claimed as a deduction under Section 80C. The maximum deduction that is permitted under Section 80C is Rs. 1,50,000. While the interest that is earned from PF at more than 9.5% rate is taxable as ‘Income from Other Sources’.

However, if a taxpayer withdraws amount before 5 years, the taxability of the investment amount and the interest amount varies.

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
Employee Provident FundIncome Tax Return
RELATED NEWS
PF account withdrawal: If you have withdrawn money from Provident Fund, then give information while filing tax returns, know why it is important PF account withdrawal: If you have withdrawn money from Provident Fund, then give information while filing tax returns, know why it is important
PF Status: How to check your provident fund balance through Umang App PF Status: How to check your provident fund balance through Umang App
EPFO members alert! So easy - Know PF balance amount, latest Provident Fund contribution just by SMS - Here is how EPFO members alert! So easy - Know PF balance amount, latest Provident Fund contribution just by SMS - Here is how
Employees Provident Fund: When and how much tax you have to pay on PF money Employees Provident Fund: When and how much tax you have to pay on PF money
UP EPF scam: What's next in Employees Provident Fund suspected money laundering? All you need to know UP EPF scam: What's next in Employees Provident Fund suspected money laundering? All you need to know

LATEST NEWS

BPCL Privatisation News Today: Money! Special dividend to shareholders? Check latest stake sale update

PM Kisan Samman Nidhi 8th installment: Know when Rs 6,000 amount will be credited into your account-Steps to check your name, transaction details in beneficiaries list

MPSC Prelims admit card 2021 released on mpsc.gov.in-Download it in 4 easy steps

BPCL Share price: Jefferies Reiterate Buy rating with target of Rs 500

7th Pay Commission latest news today: Central government employees alert! This premium is part of your allowance

KIMS IPO: Rs 700 crore! All details of initial public offering of Krishna Institute of Medical Sciences

Oppo F19 Pro, F19 Pro+ 5G India launch soon - Here's all you need to know

Hero MotoCorp shares rise nearly 4 pc as sales rise in Feb

Good news for Vi users! Vodafone Idea subscribers to get health insurance benefit on mobile recharges

PPF Calculator: Your Public Provident Fund account can make you crorepati! Follow this earn while you sleep strategy

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
Copyright © Zee Media Corporation Ltd. All rights reserved