Lump-Sum Payment

Tax Glossary Definition

Lump-Sum Payment

A lump-sum payment is a one-time large payment made to an individual, which may be fully or partially taxable depending on its nature and applicable provisions under the Income Tax Act. Such payments are often received at the end of employment, retirement, or as settlement of dues.

Example: Retirement gratuity or commuted pension received by an employee is considered a lump-sum payment, with specific tax exemptions or liabilities depending on statutory rules.

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