Yes, friends, how are you? I am C.S. Shreya Gupta, friend.
We were discussing about your salary head, friends.
We had discussed a lot about salary head.
We had also played the game of bird flying here.
And I had asked you that what all can be covered in salary?
Can an employer give all these things to his employee?
The answer was that he can give everything.
We just had to check what will be taxable and what will be
exempt from it.
Friends, I will take this discussion further.
And we will talk about a very interesting topic, which is
called Gratuity.
Friends, you must have heard about Gratuity from someone or
the other.
Now, what is Gratuity?
Sir, what is Gratuity?
Friends, Gratuity is the result of your loyalty and honesty.
If you work in the same company for more than 5 years, then
your employer gives you an amount for your honesty, that is
called Gratuity.
Sir, really?
Yes, sir.
Gratuity is applicable only when you work in the same
organization for more than 5 years.
Then you become eligible for Gratuity.
There are many other conditions for this.
But all these are written in the Payment of Gratuity Act.
Government has made an act to regulate this Gratuity.
Although we do not discuss much about it in our income tax.
We will only discuss that, how an employer gives Gratuity
to his employee.
First of all, tell me, can an employer give Gratuity to his
employee?
Yes or No?
Tell me.
Hey, useless fellow, at least tell me now.
I told you in the first lecture.
He can give everything.
He can even give his land.
The problem is with taxability.
So, any employer can give Gratuity to his employee.
Now, let us discuss about its taxability and exemption.
What is taxable in this?
What is exempt in this?
Keep watching with me, friends.
Now, I have said that if you work in any organization for
more than 5 years, then you become eligible to get Gratuity.
Generally, you get a salary.
You do not pay much attention to Gratuity.
When do you take out Gratuity?
If there is an emergency in your house, if there is a
wedding, if someone is sick, or if you have to spend some
money, then a person takes out Gratuity money.
Otherwise, generally when there is a retirement, then only
we withdraw that money.
So, the government said, that if during the employment,
your job is still going on, and during the employment, if
you withdraw that Gratuity, in that case, in your hands, it
will become taxable.
The government believes that if you are withdrawing
Gratuity, then there is a large amount of Gratuity.
Because every month, suppose that person says that for one
year, I will give you Rs.
40,000 for Gratuity.
And suppose your service is for 10 years.
So, according to Rs.
40,000, you have collected Rs.
4 lakhs.
So, the government believes that if during the service, you
withdraw that money, then either you are taking it to buy a
car, or to buy some gold and silver.
It does not believe that there is an emergency in your
house.
So, in that case, it becomes taxable in your hands.
If you, we are talking about Gratuity, if you withdraw it
during the service, your job is still going on, if you
withdraw it during the service, then in your hands, it will
become taxable.
Sir, tell me one thing, will it become taxable?
I have only got Rs. 1.
Yes, Rs. 1 will also become taxable.
Sir, I have got Rs. 100.
If I have got Rs.
1, then what is the value of Rs.
You have withdrawn it during the service, if you withdraw
it during the service, then in your hands, everything will
become taxable.
Sir, tell me one thing, you had said that government
employees, government employees, the government favours
them, gives them some benefits.
So, is it taxable in the hands of government employees?
The answer is, yes.
In the hands of government employees, this Gratuity, which
it receives during the service, or withdraws, in its hands,
it is taxable.
Whether it is government, or private, in the hands of any
employee, it becomes taxable.
Now, let's talk about the second case.
Is the point clear so far?
Now, what is the second case?
You withdraw that money during your retirement,
or when you leave your job, then you withdraw that money,
at the time of retirement.
Take this.
In only two cases, you will withdraw that money.
If there is an emergency in your house, then during the
service, you withdraw that money.
If there is no emergency in your house, you don't need
money, then when you are retiring, then your employer,
whatever balance you have, will add Gratuity to it.
At the time of retirement, you are receiving Gratuity.
What will be its taxability?
How much will it be taxable?
How much will it be exempt?
We are discussing this here.
There are two categories in this.
An employee on whom the Gratuity Act applies.
This Act of Gratuity, it applies.
This Act does not apply on one.
This Act applies on one.
There are some conditions of that Act on which people it
applies.
We are not discussing that here.
For example, the company knows where you work, whether the
Act is being applied on it or not.
So you don't have to think about it.
You just have to ask them whether the Act is being applied
on you and the answer will be Yes or No.
If they say Yes, then whatever we will discuss later, you
can exempt it according to that.
I will make it fresh.
If the Act on you, the Payment of Gratuity Act, for
example, if it is being applied on you, then what should
you do in that case?
If the Act is being applied on you, then the government
says 15 divided by 26 into the completed year.
The number of jobs you have done, the completed year of
service multiplied by your salary.
Either you do this or the actual amount that you have
received,
or Rs. 20 lakhs.
Out of these three, whichever will be the lowest, what will
happen to you?
It will be exempted and the rest will be taxable.
Look at this.
What are we doing?
We are discussing about
Gratuity.
We are seeing that a person has received
Gratuity during his retirement.
Who has received it during his retirement?
A person has received it on whom the
Payment of Gratuity Act is being applied.
Now we are seeing that he has received it.
How much of it should be exempted?
How much of it will not be taxable?
The Government has said that you should check these three
things.
First, the actual amount that you have received,
Rs. 20 lakhs, or Rs.
Out of these three, whichever will be the lowest, what will
happen to you?
It will be exempted and the rest will be taxable.
Let's discuss this further. I don't think there will be any
problem till here.
Will you be able to get the actual receipt? Do you know how
much you have got in actual?
You must be aware of it.
After that, will you be able to get Rs.
20 lakhs?
This is a limit of Rs. 20 lakhs.
Now, let's discuss this.
First of all, what is being said in this?
Multiply 15 by 26 from the completed year.
Sir, what is this completed year?
Do you know anything about the completed year?
Think about it yourself and tell me.
What should be the completed year?
You have been working in an organisation for the past 30
years.
So, what will be the completed year?
How many years have you completed? 30 years.
You have been working in any organisation for 25 years.
So, how many years have you completed? 25 years.
There is no problem till here.
Complete year.
Completed year.
The years that I have completed.
Sir, tell me one thing.
You are telling a simple case.
Assume that I have been working in an organisation for 30
years for 7 months.
Now, what should be the completed year? 30 years or 31
years?
I said, your question is very good, my dear.
Do you ask such questions to trick the teacher? do you
think the master is so straight forward that he will get
caught?
Sir, in that case also, the master says, you round off.
If it goes beyond 6 months, then take the next one.
Like in your question, it is 30 years and 7 months.
So in that case, because 7 months went beyond 6 months,
then according to 7 months, take 31 years.
In that case, it will be 31 years.
Sir, suppose 30 years is 5 months, then keep 30 years.
Is the point clear?
Completed year.
The number of years of service you have completed in that
organization, that will be your completed year of service.
Multiplied by salary.
What is the salary?
Salary is the last salary you had.
Last salary.
And in salary, you add DA also.
Dearness Allowance.
By adding, your salary will be the last one.
If you are 60 years old, then in the 60th year, your last
month's salary, add Dearness Allowance in that.
Multiply that by how much?
By the completed year of service.
And multiply that also by 15 divided by 26.
26 days of work is done in a month.
Subtract 4 Sundays.
26 days are left.
According to him, according to 15 days, you will get a
graduate degree.
This figure is exempt.
If you get something on this,
then it is taxable.
Let's take an example.
For example, there is a person who has got a gratuity of 50
lakhs.
So, the actual receipt is 50 lakhs.
Let it be 20 lakhs.
No problem.
Let's see this.
Assume that the person's salary during retirement was 1
lakh rupees.
And his 30 or 26 years were his completed years.
In that case, what will we do? 15 divided by 26.
And how many years were there? 26 years.
Multiply it by 1 lakh.
What will be the answer?
See.
If you subtract 26 from 26, the answer will be 15 lakhs.
Now, you compare.
15 lakhs.
How much did you get here? 50 lakhs.
And how much is here? 20 lakhs.
Out of all three, how much is less? 15 lakhs.
So, how much will be exempt?
Exempt.
How much will it be?
In this case, what is the least out of all three? 15 lakhs.
15 lakhs will be exempt.
How much did you get? 50 lakhs.
15 lakhs exempt.
And how much will be the employee's tax? 35 lakhs.
In this case, the answer will be tax.
This is the point.
Look at the three points.
The least out of all three is exempt.
And the rest is taxable.
There is no problem with two out of three points.
One has a limit of 20 lakhs.
The other is actual.
What is the problem? 15 divided by 26.
There is no problem with this either.
15 divided by 26.
How do we multiply?
By the completed year.
Completed year means the number of years of service that
has been given in that organisation.
If it goes beyond 6 months, then round off and take it in
the next one.
If it is 7 months, then take it for 31 years.
And lastly, what does salary mean?
Salary means the salary of that person at the last time.
Salary plus DA,
Dearness Allowance.
Take it in that case.
And you will be exempt.
Is the point clear?
Once you read it, you will understand.
Sir, is this the end of the concept?
No, friends.
Remember, this concept applies to the person on whom the
Payment of Gratuity Act was applied.
There was one last concept on whom the Payment of Gratuity
Act was not applied.
What should we do in that case?
Sir, is it so difficult?
Sir, we were thinking that we will take a job as an income
tax consultant or do something.
This is becoming very difficult, sir.
How will we do this, sir?
I am saying, friends, if you go to pluck a flower from
somewhere, then there are thorns along with the flower,
friends.
There is also a struggle with success.
And the struggle happens first, friends.
The struggle does not happen later.
If you see any person today, if you see Virat Kohli, you
say, he plays so well, he has so much money.
I wish I could be like him.
You are saying that by looking at his present life,
I could be like him.
Can you do this?
Can you play in the sun for 8-10 hours?
Can you do net practice for 8-10 hours when he goes around
the ground?
He has done that too.
He also says that when his father expired, he played the
match.
Friends, there are many stories of people.
The success that you see, you get 5-7% success when you put
in 100% labour.
First learn to put in labour.
Make struggle your friend.
You get success only when you struggle, sir.
Fear does not work.
Fear does not lead to victory.
Fear leads to struggle first.
Struggle leads to competition.
And competition leads to victory, sir.
He was the one
on whom the Payment of Gratuity Act used to apply.
Now I will talk about him
on whom the Payment of Gratuity Act does not apply.
What does he have to do?
Sir, he did not have anything.
His two things are exactly the same.
Let's reduce your confusion here.
His two things were exactly the same.
He did not apply the Act on him.
First of all, he did not have to do anything.
Actual.
Do you know how much he received in Actual?
You will get to know when you see in Actual.
Second, the same 20 lakhs.
This is the third problem.
His two things are exactly the same.
His two things are absolutely clear.
Come, let's see the third thing.
What is the third thing?
1 by 2.
15 x 26.
How much is it here? 1 by 2.
Completed year.
It was the same there.
It is the same here.
And what is here?
There was the salary.
The last one.
Here you have to take the average.
Average salary.
First, absorb this.
I will explain later.
First, see what this is.
Actual and 20 lakhs.
Both are the same from the beginning.
There is nothing to worry about.
Now see this once.
Try to understand this by reading it.
Take this a little here.
Come, let's see.
1 by 2.
It was 15 x 26 there.
Here you have to take 1 by 2.
Average salary.
Whose average salary?
The one who has served the organization for the completed
year.
But there is a slight difference here.
Why have I made this star?
The difference is that in that case,
I could have given the same amount.
But in this case, the difference is that in that case,
a student had asked me a question.
He was trying to act smart.
He was saying that he will trap the teacher.
He said that if let's say there were 7 months.
30 years and 7 months.
So what were we doing?
We took 31 years.
But in this case, the teacher is acting smart.
The teacher is saying that if there are 30 years and 7
months in this case,
then ignore the 7 months.
And you take only 30 years.
Is there any confusion or not?
What was the previous one?
On which the act was applied.
In that case, if there were 30 years and 7 months, then we
had to take 31 years.
But here, if there are 30 years and 7 months, then we don't
have to take 7 months.
We have to take only 30 years.
This is the only difference between the two.
Is it clear till here?
Is this clear? 1 by 2.
Instead of 15 divided by 26, 1 by 2.
This is the completed year.
Now come to the average salary.
In the salary chapter, if there is any exemption,
definitely ask the definition of salary.
Ask what to take in salary and what not to take.
Every exemption has different things.
What was the salary there?
The salary of that person on the last day, plus dearness
allowance.
What is there in this case?
In this, we have to take the calculation of 10 months.
10 months.
In the last 10 months, in 10 months, what was the average
salary?
Plus what was the average DA of 10 months?
And if a person gets a commission on the basis of turnover,
according to sales, then this has to be taken.
But this average has to be taken for 10 months.
Not for 1 month.
Not for the last month.
If it has to be taken, then when?
For 10 months.
When he has retired today, then before that, what was the
average salary of 10 months?
In that average salary,
what was the average dearness allowance of 10 months?
And if that person gets a commission on the basis of
turnover, then what is the average salary of 10 months?
That will be your salary.
You have understood the complete idea.
Multiply it by 1 by 2.
Solve the question with your eyes closed.
It will be easily solved.
This is for those on whom the Act does not apply.
Government employees.
Here you must be thinking that does the government have any
benefit?
Because when you received a gratuity during your job, it
was taxable for both.
Sir, this is a case of retirement.
In retirement, you have told us what is exempt.
Do government employees get any benefit?
I would have told you to do a government job.
It is fun.
In retirement, you get a gratuity.
Government employee does not get a single rupee tax.
Nothing is taxable.
Even if you get 1 crore.
Nothing is taxable in that case.
Government employees, during retirement, if they get a
gratuity, then nothing is taxable.
In other cases, you have to see whether this payment of
gratuity act applies or not.
If it does, then take it separately.
And if it does not, then take it separately.
The difference between the two is only one thing.
There they do 15 x 26.
What do they do here? 1 x 2
They take 20 lakhs there and 20 lakhs here.
They take actual receipt there and actual receipt here.
This is the point.
This is the point, friends.
Let me show you a little.
See, this is the payment of gratuity.
He is talking about gratuity.
Can you see it?
He is talking about gratuity.
He is saying that if an employee gets
If a central government employee gets at the time of death
or at the time of retirement, if you are a government
employee, then you will get fully exempt.
If you are reading this, then try to understand what are
the benefits of a government job.
People make fun of government employees.
But what are the benefits?
A person got a gratuity of 50 lakhs there.
In our example.
And we exempted 15 lakhs.
The poor guy got a tax of 35 lakhs.
If the government employee gets this, he would get 50 lakhs
at home and wouldn't have to pay tax.
This is the benefit, isn't it?
Think about the benefit.
No one will tell you all these things.
Come, see this.
What to do with the gratuity that is covered by the Act? 20
lakhs of gratuity receipt.
Now 15 divided by 26.
And what to do with the one that is not covered?
Here it is, sir.
Half month means 1 by 2.
This is the point, friends.
I have prepared a flow chart so that it becomes easy for
you to understand.
If it is received during the service, then it is fully
taxable.
If it is at the time of retirement or death, and if it is a
government employee, then it is exempt for him.
For the rest, it is taxable.
See if it is covered in the Act or not.
If it is covered, then what to do?
If it is not covered, then what to do?
Okay, friends?
With this, our topic on gratuity ends.
Thank you very much, friends.