Income Tax department imposes Rs 2.2 lakh penalty on retired government employee for gratuity tax exemption claim

While filing your income tax return and claiming tax exemptions, it is important to be aware of the limits and applicability. In one such case where the taxpayer was mistaken about the amount of tax exemption available to her for a gratuity amount after retiring, the Income Tax department ended up imposing a penalty. She eventually appealed to the Income Tax Appellate Tribunal and won. What was the case and what does the ruling mean for taxpayers? According to an ET report, a retired Kerala state government employee faced a tax penalty after incorrectly claiming excess tax exemption on her gratuity. She submitted her income tax return on August 6, 2018, for FY 2017-18, initially claiming Rs 10 lakh tax-exempt gratuity under Section 10(1) of the Income Tax Act. Subsequently, she file