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Gratuity is One-time payment


  1. KRISHNA GOPAL TIWARY & ANR (APPELLANT) are employees of Coal India Limited, claim to declare the applicability of Payment of Gratuity (Amendment) Act, 2010 from 1.1.2007 was declined.
  2. Government of India approved enhancement of gratuity to the executives and non-unionized supervisors of Central Sector enterprises. The ceiling of the gratuity was raised to Rs.10 lakhs in terms of office memorandum of Government of India .
  3. The grievance of the appellants is that the tax has been deducted at source when the gratuity was paid to the appellants before the commencement of the Amending Act. The appellants have thus challenged the date of ccommencement. Learned counsel for the appellants argued that the amendment of The Gratuity Act is to grant liberalised benefits. Therefore, it would be retrospective.
  4. On the other hand, learned counsel for the Union has argued that , who get recurring benefit every month whereas, the gratuity is One-time payment.It was thus argued that benefit of gratuity stands on different footing, then recurring right of payment of pension.
  5. Court find that the date of commencement fixed by the Executive in exercise of power delegated by the Amending Act cannot be treated to be retrospective as the benefit of higher gratuity is one-time available to the employees only after the commencement of the Amending Act. The benefit paid to the appellants under the office memorandum is not entitled to exemption in view of specific language of Section 10(10)(ii) of the Income Tax Act.


Appeal was dismissed

Judgement name- Krishna Gopal Tiwari & ANR. Vs. Union of India & ORS.

Judgement date- 13th August 2021

Citation- civil appeal no. 4744 of 2021

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