Income tax gratuity

Others 275 views 3 replies

piyush naagar

3 Points Joined March 2019

M. Has retired from a private company on 30th November 2017. He was working since 16
1991. He received 2,00,000 as gratuity. His salary rude was 5,000-100-8,000-200-15.00
1st March, 2006. He was also getting D.A. 25% of Basic Salary: Calculate his exempted
(A) if he comes under Gratuity Act, (B) if he doesn't come under Gratuity Act....how can I solve this question

Replies (3)

Rajesh Goyal

57 Points Joined February 2019

No tax required to paid for gratuity up to 20 Lakh.

Kritika Shetty

accounts

311 Points Joined August 2017

(A) Employees Covered Under the Payment of Gratuity Act

Calculation of amount of gratuity exempted from tax :The least of the following is exempt from tax:

Last salary (basic + DA)* number of years of employment* 15/26;
Rs. 20 lakhs (which has been hiked from Rs. 10 Lakh as per the amendment);
Gratuity Actually received

(B) Employees Not Covered Under the Payment of Gratuity Act

Calculation of amount of gratuity exempted from tax :: The least of the following are exempt from tax:

- Last 10 month’s average salary (basic + DA)* number of years of employment* 1/2;
- Rs. 10 lakhs (the hike to Rs 20 lakhs is not applicable for employees not covered under the Payment of Gratuity Act)
- Gratuity actually received