a) b)

The amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with. the termination of his employment or the modification of the terms and conditions relating there to.

Profit in lieu of salary includes- Pension, Gratuity, Encashment of leave salary.

According to section 10(10A) any annuity or pension is a periodical payment received by an employee from his employer for the service rendered by you. It is paid by the employer either voluntarily or out of contractual obligations.

i)

ii)

In case of Non-Government employee it has been classified When the employee receive any gratuity, the commuted value of 1/3rd of pension will be exempted from tax. When employee does not receive any gratuity, in this case of the commuted pension will be exempted from tax.

Gratuity is a part of salary that is received by an employee from his/her employer in gratitude for the services offered by the employee in the company. Gratuity is a defined benefit plan and is one of the many retirement benefits offered by the employer to the employee upon leaving his job.

According to section-10(10) of income tax act, the exemptions on gratuity will be given to the non government employees in the following basis.

CASE-1
Approved by payment of gratuity act 1972. In this case the least of the following will be exempted from tax. 1. month or 15 days of the salary of each year completion of his service.(any fraction of his services will be taken as 1 year if it is excess over 6 months) 2. Rs 10,00,000 3. Actual amount received.

 1.

2.

3.

CASE-2 Not approved by payment of gratuity act 1972. 15 days salary of each year of his service.(any fraction is ignored). Rs 10,00,000 Actual amount received.

The least of above will be considered for exemption.

According to section-10(10AA), If an employee does not avail, his earned leave & receives payment in respect of that period of leave which is not availed by him while he continue the job or resignation of the job or retirement of the job is taxable, but any amount received by the govt. employees the leave encashment salary is exempted with least of the following-

1.

2.
3. 4.

Cash equivalent salary 10 months average salary Rs 3,00,000 or Amount actually received