Mr. Ramseshan, General Manager of Gee Co. Ltd., retired on 31st October, 2017, after rendering service for 29 years and 8 months. His monthly salary break up are: (i) Basic salary ₹ 52,000; (ii) DA 50% of basic salary (e
CS Executive · Tax Laws · PYQS · December 2018
Mr. Ramseshan, General Manager of Gee Co. Ltd., retired on 31st October, 2017, after rendering service for 29 years and 8 months. His monthly salary break up are: (i) Basic salary ₹ 52,000; (ii) DA 50% of basic salary (eligible for retirement benefits); (iii) HRA ₹ 20,000; (iv) City Compensatory Allowance ₹ 5,000. He received ₹ 15 lakh from the employer by way of gratuity. He is governed by the Payment of Gratuity Act, 1972. Determine the amount of gratuity chargeable to tax.
Answer & Explanation:
Determination of Gratuity Chargeable to Tax Particulars Amount (₹) Amount (₹) Gratuity Received 15,00,000 Less: Exemption u/s 10 (a) Monetary Limit 10,00,000 (b) Gratuity Actually Received 15,00,000 (c) 15 days salary for each completed year of service Basic Salary + DA * 15 / 26 * 30 years {(₹52000 + ₹26000) * 15/26} * 30 13,50,000 Least of the above (a), (b) or (c) is exempt (10,00,000) Taxable Gratuity 5,00,000
Topics: Income Tax Act, 1961
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