Is there any provision regarding relief on Gratutity recieved at the time of retirement in Income tax act. If no, then what does Rule 21A Sub rule 3 of IT Rules states?
Thanks in advance.
Jayesh Vyankatrao Pawar
(Accounting & Taxation)
(51 Points)
Replied 05 August 2016
Hi,
Graduity is received by the government employee at time of retirement or at the time of death is not taxable .it is tax free but it is received by the other than government employee. it is taxable as per below under section 89 (1)
if the employees are covered under Payment of Gratuity Act, 1972, exemption of the least of the following shall be given-
**Salary for this purpose shall be last drawn and DA only
If the employees are not covered under Payment of Gratuity Act, 1972, exemption of the least of the following shall be given-
Salary for this purpose shall be- Basic + DA + Commission as % of sale
Basic salary shall be average salary of last 10 months preceding the month of retirement.
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