Take This Quiz & Predict Your Score in the coming CA CS or CMA Exam!
  • How important it is for you to pass the exam in this attempt?
  • What percentage of course you have finished well so far roughly?
  • How many hours you study in a day?
  • How many times you have revised the topics you have finished
  • Have you taken online or pen drive or live class from a renowned faculty?
  • What percentage of the classes you have watched?
  • Have you attempted mock tests or practice tests yet?
  • Are you planning to attempt mock tests conducted by external bodies- ICAI, ICSI, ICMAI or other institute?
  • How many tests you have taken?
  • Did you manage to finish the test papers on time?
  • Are you strictly following study material provided by the exam conducting authority such as ICAI/ICSI/ICMAI/Other Body?
  • How is your health in general?
  • How is your food habit?
  • Any interest in yoga or exercise or play sports regularly?
  • Planning to sleep well nights before the exams?
  • Planning to have light food and water before exams?

Section 3 Retirement Benefits 4

Section III: Retirement Benefits

How is gratuity taxed?

Gratuity is a retirement benefit that employers provide for their employees. The employee is entitled to receive gratuity when he completes five years of service at that company. It is however only paid on retirement or resignation.

Gratuity received on retirement or death by a Central, State or local government employee is fully exempt from tax for the employee or his family.

The tax treatment of your gratuity is different depending on whether your employer is covered by the Payment of Gratuity Act. Check with your company about its status and then proceed to calculate.

If your employer is covered by the Payment of Gratuity Act, then the least of the following three is tax-exempt.

  • 15 days salary based on the salary last drawn for every completed year of service or part thereof in excess of 6 months. For simplicity sake, this is calculated as last drawn salary x number of years in employment x 15/26.
    (where last drawn salary is Basic salary and DA and number of years in service is rounded off to the nearest full year)
  • Rs 10,00,000
  • Gratuity actually received

If your employer is not covered under the Payment of Gratuity Act, the the least of the following three is tax-exempt.

  • Half month’s salary for each completed year of service. While calculating completed years, any fraction of a year shall be ignored. For example – if you have worked in an organization for 14 years and 9 months, the number of years in employment shall be considered to be 14 years. Here salary is taken as average salary of the 10 months immediately before the month in which the person retires.
  • Rs 10,00,000
  • Gratuity actually received

Section III: Retirement Benefits



At CAKART you will get everything that you need to be successful in your CA CS CMA exam – India’s best faculty video classes (online or in pen drive) most popular books of best authors (ebooks hard copies) best scanners and all exam related information and notifications.Visit and chat with our counsellors any time. We are happy to help you make successful in your exams.


Click Here to download FREE CA CS CMA Text Books.

Leave a comment

Your email address will not be published. Required fields are marked *