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of <h1>Employee Retires with Rs. 6.5L Gratuity; Rs. 5.45L Exempt Under IT Act Sec 10(10)(iii), Rs. 1.04L Taxable.</h1> An employee of a company not covered by the Payment of Gratuity Act, 1972, retired after 26 years of service, receiving Rs. 6,50,000 as gratuity. The employee's average monthly salary, including basic pay, dearness allowance, and commission, was Rs. 41,967. According to Section 10(10)(iii) of the Income Tax Act, the exempt gratuity amount is the least of Rs. 5,45,571, Rs. 10,00,000, or Rs. 6,50,000. Thus, Rs. 5,45,571 is exempt from tax, leaving Rs. 1,04,429 taxable for the assessment year 2015-16.
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