Gratuity Payment v/s income tax

[Ashok Chopra]

Dear Sir,

I am want to pay  voluntary gratuity to my some employees who have not completed three years and i want to pay them gratuity for three years.

My querry:-

Will income tax department will disallow gratuity expenses as they have not completed five years as per Payment of Gratuity Act?, if yes, please guide me what should i do?

Should I deduct TDS on it or not?

Thanks and regard

AI Summary

Tax Implications of Voluntary Gratuity Payments Under Five Years: Ex-Gratia, Subject to Tax and TDS An individual inquired about the tax implications of paying voluntary gratuity to employees who have not completed the required five years under the Payment of Gratuity Act. The concern was whether such payments would be disallowed by the income tax department and if TDS should be deducted. A respondent clarified that these payments would be treated as ex-gratia, subject to tax and TDS. The individual further questioned if booking the amount in the Gratuity account would result in tax liabilities for the company and sought advice on avoiding TDS and income tax liabilities during assessment.