Example:-An employee of X Ltd. retires on 10th March, 2015 after service of 26 years and receives ₹ 6,50,000 as gratuity. X Ltd. is not covered by the Payment of Gratuity Act, 1972). If Salary drawn by him during 1st May 2014 and 28th February 2015 is as follows: 1st May 2014 to 31th December 2014 Rs. 26,000 p.m. 1st January 2015 to 28th February 2015 Rs. 26,500 p.m. Besides, he receives ₹ 400 p.m. as dearness allowance (forming part of salary for the computation of retirement benefits). He is also entitled to 6% commission on sales achieved by him (during 1st May 2014 and 28th February 2015, turnover achieved by the employee is ₹ 25,77,860). Is the entire amount of gratuity exempt from tax?

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..... eives ₹ 400 p.m. as dearness allowance (forming part of salary for the computation of retirement benefits). He is also entitled to 6% commission on sales achieved by him (during 1st May 2014 and 28th February 2015, turnover achieved by the employee is ₹ 25,77,860). Is the entire amount of gratuity exempt from tax? - Salary - Gratuity - [Sec. 10(10)] Income Tax – Salary - Income Tax - .....

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..... 15,467 Average Monthly Salary (a + b + c) ₹ 41,967 Out of ₹ 5,45,571 (i.e. 0.5 x 41,967 x 26) ₹ 10,00,000 6,50,000 ₹ 5,45,571 being the least of the three sums, is exempt u/s 10(10)(iii). The balance of ₹ 1,04,429 is taxable for the assessment year 2015-16. - FAQ - Frequen .....

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