Delayed tax

since your employer is covered under POGA and you have received gratuity under POGA, the amount exempt from tax should be computed according to Section 10(10)(ii) of the Act.

The amount of exemption shall be least of the following:

15 days salary based on last drawn salary for each completed year of service or part thereof in excess of 6 months; or

Statutorily prescribed cap of Rs 10, 00,000; or

Actual gratuity received.

Any gratuity amount received in excess of above prescribed limit shall be taxable in your hands.

The question is not about tax on the benefits which your brother obtained. It is on tax on the further income when the original tax-free amount is placed as FD, in the form of interest on such FD. Under the Indian Income-tax law any income from any asset transferred to one's spouse without adequate consideration shall be taxable in the hands of the original assessee. The income in the form of interest on the FD's will be added to other income of your brother and he (your brother) will have to pay tax on the interest income. If the interest is reinvested by your brother's wife the interest income on such interest shall be taxable in the hands of your brother's wife. If her total income is below the limit exempt from tax, she will have to pay no tax. Example: If your brother had placed Rs.1000/- as FD at 10% per annum the Rs.100/ received as interest will be taxable in the hands of your brother. If Rs.30/- is paid as tax on the Rs.100/-, and the remainder of Rs.70/- is reinvested by your brother's wife, the interest of Rs.7/- which your brother's wife may get will be taxable in her hands only.

THE VIEWS EXPRESSED APPEAR TO BE CORRECT.