P.S.E.S GYAN

GAS lena hua aasan

INCOME TAX

P.S.E.S GYAN
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Q.No. 1 - How to compute relief under section 89 in respect of gratuity?

Ans - Relief in respect of taxable gratuity [i.e., gratuity received in excess of amount exempt under section 10(10),] can be classified as follows:
   (a)   Gratuity payable in respect of service of 15 years or more:
In this case relief is computed as follows:
     1.   Compute the average rate of tax on the total income (including gratuity) of the year in which gratuity is received.
     2.   Compute the average rate of tax on the total income of previous three years by adding one-third of gratuity to each of three years.
     3.   Find the average of the three average rates determined in Sl. No. (2) above.
     4.   Find the difference of rate determined at Sl Nos. (1) and at (3),
     5.   Amount of relief is tax on gratuity computed at the rate determined (i.e., excess rate) in (4) above.
Average rate of tax (%) =  Tax liability for the year X 100
                                                    Taxable income for that year
   (b)   Gratuity payable in respect of service of less than 15 years, but not less than 5 years:
In this case relief is computed in the same manner as discussed in (a) above, except that gratuity is to be spread equally over past two years instead of three years.
    (c)   No relief is available for gratuity received in respect of service rendered for a period of less than 5 years.

PSES Word of the Day

Today's Word of the Day is :
Shunt = हटा कर डाल देना
Usage: Smriti Irani shunted from HRD ministry to textiles ministry.