SERVICIOS SUMINISTRADOS. MÉTODOS DE EVALUACIÓN Y FUENTE DE DATOS

(i) The amount of any compensation due to or received by an assessee from his employer or former employee at or in connection with the termination of his employment or the modification of terms and conditions relating threto.

(ii) Ant payment (other than any payment referred to in clause (10), clause (10A), clause 10B , clause 11, clause 12, 13 (with effect from 1-4-1996 or clause 13A of section 10, due to or received by an assessee from an employer or a former employer or from a provident or other fund to the extent to which it does not consist of contributions by the assessee or interest on such contributions or any sum received under a key man insurance policy including the sum allocated by way of bonus or such policy.

(iii) Any amount due to or received whether in lump sum or otherwise by any assessee from any person:

b. After cessation of his employment with that person PAYMENTS EXEMPTED U/S 10

Any payment received whether from present or past employer, is taxable as profit in lieu of salary. The following receipts, however are exempted:

1. LEAVE TRAVEL CONCESSION [SECTION 10(5)]

Any time amount received by an employee from his employer for proceeding on leave any where in India or on proceeding to any place in India after retirement is exempted up to the extent of an amount provided u/s 10(5) and rules framed there under.

This benefit is available to employee for self and any member of his family. The word “family” includes spouse children of the individual and parents, brother or sisters who are mainly dependent on such individual.

The exemption under this section shall be available subject to rules and regulations framed by the Central Government.

2. PERQUISITES AND ALLOWANCES PAID BY GOVERNMENT TO ITS EMPLOYEES POSTED OUTSIDE INDIA [SECTION 10(7)]

Any perquisite or allowance given by government to its employees who are working outside India is full exempt from tax. As such motor car provided to employee working outside India or house rent allowance or any other such benefit is fully exempted form tax.

3. DEATH CUM RETIREMENT GRATUITY:

Important points to be kept in view while calculating exempted amount of gratuity u/s 10(10):

1) Employees of statutory corporation will be covered under the category of non- government employees.

2) Any gratuity received by the legal heirs of government employees is fully exempted. For others it shall qualify for exemption in the same manner but taxable under the Income form other sources.

3) In case employee has worked with more than one employer but is receiving gratuity only from present employer, his total service ie. From all previous employer from whom he has not received any gratuity, shall be counted.

4) In case employee has retired but has been re-employed by same employer, exemption shall be allowed.

5) In case employee receives gratuity from two employer under whom he is working simultaneously, exemption shall be allowed subject to maximum of Rs.3,50,000.

6) In case gratuity is received while employee is still in service with the same employer it is fully taxable.

7) Exemption of gratuity shall be allowed only if relationship of employer and employee does exist. It simply means that gratuity paid to an agent shall not be exempted as there is no relationship of employer and employee between an agent and his principal.

(i) GRATUITY RECEIVED FROM CENTRAL/STATE

GOVERNMENT/LOVSL BODIES: Any such received by the employees working in Civil or Defence services of government of India or any post of state government or local authority covered under Revised Pension Rules of the Central Government shall by fully exempted.

(ii) GRATUITY RECEIVED UNDER PAYMENT OF GRATUITY ACT 1972: Payment of Gratuity act 1972 applies to employees or workers of following categories:

a. Workers working in every factory, mine, oil field, port, plantation and railway

b. Workers working in every shop or establishment in which 10 or more persons are employed or were employed on any day of the preceding 12 months

c. Workers//employees working in any other establishment or class of establishment in which 10 or more persons are employed or were employed on any date of the preceding 12 months and as the Central Government may by notification specify in this behalf.

In case of employees covered by the Payment of Gratuity act 1972, an amount being least of following three items shall be exempted and excess if any, will be taxable. These items are:

a. 15 days salary (7 days in case of employees working in seasonal factories) for each year of completed service or part thereof in excess of six months. While calculating length of service period exceeding 6 months or more is to be taken as one year. If it is less than 6 months it shall be ignored.

b. Notified limit Rs.3,50,000

c. Gratuity actually received by the employee

“Salary” means salary last drawn by the employee and it also includes dearness allowance. Average salary shall be calculated by taking 26 days as the maximum number of working days in a month. For example if the employee was drawing Rs.1,300 at the time of his retirement, then 15 days average salary shall be Rs.1,300X15/26=750.

PROBLEM: Mr. Yadav retired on 30-11-2008 from a coal mine after putting a service of 28 years and 10 months. At the time of his retirement he was getting a salary of Rs.16,000PM and he used to get an increment of Rs.500 PM on 1st _{April every year. His}

DA was Rs.2,000 PM Gratuity received Rs.3,40,000. find out his taxable gratuity.

COMPUTATION OF TAXABLE GRATUITY (WHERE PAYMENT OF