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Income tax on gratuity received.

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Pradip (Querist)
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09 July 2014 Dear Experts
My Auntie just retired from a PSU and received a sum of Rs. 10,00,600.00 as gratuity. Her service period was 34 completed years. At the time of retirement her Basic + DA was of Rs. 48162.00 but she received her last salary of Rs. 16054.07 (Basic + DA) for the M/O Feb 14 for 10 days only and received Rs. 48162.00 (Basic + DA) for the M/O Jan'14 . Now my question is to calculate exempt gratuity should I calculate 16054.07/26*15*34=314908.00 or 48162.00/26*15*34=944720.00. Please help me to calculate taxable gratuity.

Thanks in Advance.

CA Mohit Bansal

CA Mohit Bansal (Expert)
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10 July 2014 Hi Pradip,

You have to take last 10 months average salary for computation purposes.
In your case take average of last 10 months viz., March13 to Dec13

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