Taxability of gratuity: Any death cum retirement gratuity under the CCS PENSION RULES 1972 OR UNDER ANY SIMILAR SCHEMES RECEIVED BY ALL CATEGORIES OF CENTRAL AND STATE GOVERNMENT EMPLOYESS EXEMPTED UNDER SRCTION sec 10 Any other gratuity received under section 4(2) and (3) of the payment of gratuity act 1972. any other gratuoty received on retirement , termination or death by the employee , his widow or dependant subjecy to max. of one half montgs salary for each year of completed service sec 10(10)