Income Tax News: This Mahashivratri brings not just blessings but also a financial boost also. The Modi government has raised the tax-free limit for gratuity to Rs 25 lakh, providing a major relief to employees. This decision, announced in a cabinet meeting, comes as a boon to workers across various sectors.
Tax Relief Through Increased Gratuity Limit
Employees receiving gratuity upon retirement can now enjoy greater tax benefits. The government has increased the tax-free limit for gratuity to Rs. 25 lakh. This means employees won’t have to pay any tax on gratuity received up to this amount. Previously, the limit stood at Rs. 20 lakh. This revision offers substantial tax relief, allowing employees to keep more of their hard-earned money.
Dearness Allowance Hike for Enhanced Financial Support
Central government employees and pensioners can look forward to a 4% increase in their Dearness Allowance (DA). This takes their DA to 50% of their basic salary, effective from January 1st, 2024. This increase will be reflected in their March salary along with arrears for the past two months. This marks the fourth consecutive 4% rise in DA, demonstrating the government’s commitment to supporting its employees financially, particularly during a time of inflation.
Important Details Regarding DA Hike
It’s important to note that the 50% DA is a one-time increase. Future DA calculations will begin from 0, with the 50% added to the basic salary. For example, if the minimum basic salary is Rs. 18,000, the employee will receive an additional Rs. 9,000 (50% of Rs. 18,000) in their salary.