Taxability of retirement benefits like pf and gratuity :
Under the provident fund scheme it is notified that any payment made to an employee from a provident fund to which provident fund act ,1925 applies or from any other provident fund set up by the central government and notified by it in this behalf, is exempt from tax.
Taxability of gratuity depends on the recipient. In the hands of a Government employee Gratuity is exempt from tax. In the hands of non-Government employee, gratuity is exempt subject to the limits prescribed in this regard.
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