Provision for gratuity

gratuity is covered under section 10(10) of the act

TAXATION OF GRATUITY- received after retirement

It is fully exempt from tax u/s10(10)(i) if received by a central/state govt employee( BUT not statuory corpn employees)

for an "PAYMENT OF GRATUITY ACT 1972" least of the following 3 is exempt

a. 15 days last drawn salary- for every year of service(any fraction above 6 months is taken as one year)

b. amount "fixed" by central govt ie 350,000

c.actual gratuity recieved

For any other emloyee

exempt u/s10(10)(iii)

for above point a (1/2 month's) salary for every FULL year of service(fraction ignore)

For gratuity valuation you have to take the service of actuarial

GRATUITY PRVISIONS AS PER AS-15 EMPLOYEE BENEFITS IS CALCULATED BY ACTURIAL. THERE ARE DIFFERENT PROVISIONS FOR GOVT & NON GOVT EMPLOYEE