ITR
Relief on gratuity received
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Facts
Form 10E has a separate Annexure for gratuity received for past services. Relief applies only to the taxable part of gratuity, not the part that is exempt.
Provisions and law
- Sec 89 (now Sec 157)Relief when salary or family pension is received in arrears or in advance
- Sec 10(10) (now Sec 19)Exemption for gratuity within limits
Analysis
If gratuity of ₹28,00,000 is received and ₹20,00,000 is exempt, relief is computed only on the taxable ₹8,00,000. The annexure uses an average rate method based on income of earlier years, depending on the length of service. Compute both the exemption and relief carefully, since gratuity is a large one-time amount.
Conclusion
- Compute exempt and taxable gratuity
- Choose the gratuity Annexure in Form 10E
- Enter earlier years' income as asked
- File Form 10E before the ITR
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