20,00,000 56,077 56,077 (b) Statutory Amount (c) 15/26 x completed year of service x salary p.m. [15/26 x 36 x 2,700] Taxable Gratuity 1,48,923 - uratuity received at the time of termination of service by non-government employee (including foreign government employee) not covered under the Payment of Gratuity Act Gratuity received at the time of termination of service by non-government employee being not covered under the Payment of Gratuity Act shall be exempted from tax w's 10(10)(iii) to the extent of lower of the following: 1. Actual Gratuity received: 2. 10,00,000, and s8 3. 1/2 x Completed year of service x Average Salary p.m. Notes a) While calculating completed year of service ignore any fraction of the year. (e.g. 7 years 9 months will be treated as 7 years only) b) Average Salary here means, Basic + DA# + Commission (being a fixed percentage on turnover) being last 10 months average salary, immediately preceding the month of retirement. (E.g. If an employee retires on 18/11/2018 then 10 months average salary shall be a period starting from Jan 2018 and ending on Oct 2018). # If DA is not forming a part of retirement benefit then the same shall not be included in salary for above purpose. However, DA itself shall be fully taxable. ILLUSTRATION Mr. Old man retired from his job after 20 years 6 months and 15 days of service on 17/12/2018 and received gratuity amounting 4,00,000. His salary at the time of retirement was basic 6,000 p.m., dearness allowance 1.200 p.m., House rent allowance 2,000, Commission on turnover 1%, Commission on profit 5,000. He got an increment on 1/4/2018 of 1,000 p.m. in Basic. Turnover achieved by assessee 1,00.000 p.m. Calculate his taxable gratuity if he is a - a) Government employee b) b) Non-Government employee, covered by the Payment of Gratuity Act: c) c) Non-Government employee not covered by the Payment of Gratuity Act