Bimal is employed in a factory at a salary of ₹2,400 per month. He also gets dearness allowance @ ₹600 per month and bonus @ ₹200 per month. He retired on 31st December, 2013 and received ₹75,000 as gratuity under the Pa

CS Executive · Tax Laws and Practice · PYQS · December 2014
Bimal is employed in a factory at a salary of ₹2,400 per month. He also gets dearness allowance @ ₹600 per month and bonus @ ₹200 per month. He retired on 31st December, 2013 and received ₹75,000 as gratuity under the Payment of Gratuity Act, 1972 after serving 31 years and 4 months in that factory. The amount of gratuity exempt under the Income-tax Act, 1961 will be —
(A) ₹75,000
(B) ₹53,654
(C) ₹21,346
(D) ₹10,00,000.

Answer & Explanation:

Correct Answer: Option (B)

Correct answer: (B) ₹53,654. Exemption = 15/26×(2,400+600)×31 completed years = 53,653.85, rounded to 53,654; bonus is excluded. This answer applies to the historical law and assessment-year context of this December 2014 paper; later amendments may differ.

Topics: Income Tax Act, 1961

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