Answer

1. F

   Facts

   Gratuity is exempt up to the limits set in the law for your category of employee; any amount above the exemption is taxable as salary. Employees with less than five years of service generally do not get gratuity under the Payment of Gratuity Act.

2. P

   Provisions and law

   • Sec 10(10), Income-tax Act 1961 (now Sec 19)Gratuity received is exempt up to a formula and a notified ceiling.
3. A

   Analysis

   Check the gratuity shown in Form 16 of the old employer and how much it treated as exempt. If you received ₹3,20,000 after six years and it is within the formula and ceiling, it is fully exempt. Check the current notified ceiling before claiming full exemption.

4. C

   Conclusion

   1. 1Find the gratuity amount in the F&F statement.
   2. 2Check exempt and taxable parts in Form 16.
   3. 3Apply the formula and ceiling.
   4. 4Report the exempt part and include any taxable part in salary.

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