The government on Friday raised the income tax exemption limit on gratuity from Rs 3.5 lakh to Rs 10 lakh, with effect from May 24.
"Employees who retire, become incapacitated, terminated, or die on or after May 24, 2010, will get I-T exemption for gratuity up to Rs 10 lakh," a Finance Ministry official said here.
The Finance Ministry on Friday notified a rule in this regard, the official added.
Earlier, the Parliament had approved raising the limit of gratuity to be exempted from income tax.
The Payment of Gratuity (Amendment) Bill, 2010, was passed by the Parliament in this regard in the Budget session.
While the Sixth Pay Commission had raised the limit for Central Government employees, the Cabinet later enhanced the ceiling for the private sector workforce as well.