Wednesday, August 31, 2016

In case of any other employee –

An amount equal to the least of the following will be exempt from tax
½ x Average salary of last 10 months preceding the month of retirement x Completed year of service (fraction of a year is ignored)
Gratuity actually received
Salary includes basic pay, dearness allowance to the extent it forms part of retirement benefits and percentage wise fixed commission on turnover.

If gratuity is received by an employee from more than one employer in the same previous year or in different previous years the aggregate maximum amount exempt from tax on account of gratuity cannot exceed Rs. 10,00,000.

If an employee had also rendered service to any other employer, then period of service to such former employer is also included while calculating “completed year of service” subject to condition that any gratuity is not received from such former employer.

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