TAX ASSIGNMENT

AASHISH MISHRA 1820602

• Gratuity is a monetary benefit given by the employer, but not paid as part of the regular
monthly salary. The provisions of gratuity are governed by the Payment of Gratuity
Act, 1972, and it is given on the occurrence of any of the following events.

a. On superannuation (means an employee who attains the age of retirement is said to be

in superannuation)

b. On retirement or resignation

c. On death or disablement due to accident or disease (the time limit of 5 years shall
not apply in the case of death or disablement of the employee)

It is mandatory for the employee to have completed a minimum of five years in service
to be able to receive gratuity. It is not available for interns or temporary employees.

• Pension is taxable under the head salaries in your income tax return. Pensions are paid out
periodically, generally every month. However, you may also choose to receive your
pension as a lump sum (also called commuted pension) instead of a periodical payment.
Generally, the employer and taxpayer contribute together to an annuity fund, which pays
the taxpayer pension out of the fund. At the time of retirement, you may choose to receive
a certain percentage of your pension in advance. Such pension received in advance is
called commuted pension. Pension is taxable as salary under section 15 in the hands of a
government as well as a non government employee. Commuted pension is a lump sum
payment in lieu of periodical payment. ... 60,000/- is commuted pension which X has
received in lieu of 25% of his monthly pension.

• Motor car as a perquisite is one of the famous perquisites provided by employer. Generally,
this kind of perquisite is provided to senior employees of the organization. The taxability
of perquisites is covered under Rule 3 of Income Tax Rules, 1962.