Direct Tax Law 2009 (Solved)

Treatment of Gratuity  Sec.10 (10):

Government employees and employee of a local authority
Employees covered under Gratuity Act
Any other employee
Fully exempt
Minimum of the following 3 limits:
(1)          Actual gratuity received, or
(2)          15 day's salary for every completed year, or part thereof exceeding six months (7 day's salary for each season for an employee in a seasonal establishment); or
(3)          Rs. 3,50,000                           
Meaning of Salary:
(i)    Basic salary plus Dearness allowance.
(ii)   Last drawn salary (average salary of preceding three months in case of piece rated employee)
(iii)  No. of days in a month to be taken as 26
Minimum of the following 3 limits:
(1)         Actual gratuity received
(2)         Half months average salary of each completed year of service.
(3)         Rs. 3,50,000
Meaning of Salary:
(i)      Basic Salary plus D.A. to the extent the terms of employment so provide Commission, if fixed percentage of turnover.
(ii)    Average salary of last 10 months preceding the month in which event occurs.
(iii)   Only completed year of service is to be taken.