Gratuity is a payment from employer to employee for the service rendered. It is an agreement between employer and employee for payment during the service term and after service. As gratuity is received for service rendered, it is to be taxed under income head “Salary”.

Income Tax Act, 1961 says that gratuity received during service period is taxable for both Government employees as well as private employees.

Section 10(10) says that employees receiving gratuity and covered under Gratuity Act, 1972, amount of gratuity is exempt is least of the following :

1. Maximum amount of 20,00,000

2. Gratuity actually received

3. 15/26* (last drawn salary) * ( no. of years of services or part thereof in excess of 6 months )

NOTE : Salary = Basic pay+ Dearness allowed

Number of days in a month is assumed to be 26.

Section 10(10) says that for employees receiving gratuity and not covered under Gratuity Act, 1972 the amount of gratuity is exempt is least of the following:

1. Maximum amount of 20,00,000

2. Gratuity actually received

3. ½ * ( average of last 10 months salary) * ( no. of years of service)

NOTE : Salary = Basic pay + Dearness allowance (if terms of employment so provided + commission as fixed % of turnover

Section 15 says that any items received by employee from its employer in cash or kind or as a facility (perquisite) is taxed under income head “salary’.

Basic salary is the pay agreement between employee and employer. It does not include any kind of bonus, commission, monetary or non-monetary facilities provided by employer. Gross salary is a sum of every monetary or non-monetary item received from employer before deducting any kind of deduction as per Income Tax Act 1961.

Any amount received by employee from employer as bonus, commission or remuneration for something done during the period of employment is termed as profit in lieu of salary. It is taxed under income head SALARY.

Section 15 says that salary is chargeable on accrual basis or payment basis, whichever is earlier. If you received the salary which were certain earlier then it will notto be taxed again. If you received arrears of salary which were not certain earlier then it will be taxed now.

For example, Your Company revises salary of every employee during April 2019 for salary paid from January 2019 and it decided to increase salary by 5% of earlier salary. Now you will receive salary of January, February and March at April which were not certain earlier. Hence, arrears will be taxed now. However can claim relief under section 89(1).

In addition to basic pay you receive commission for the insurance business you bring into your Company , the additional income derive during your employment and in pursuant to terms and conditions of your employment agreement can only be taxed under income head Salary .

Section 15 says that salary is chargeable according to accrue basis or receipt basis, whichever is earlier. So, the advance salary received by employee is to be taxed in month of receipt and not in the month when it becomes due.

In accord to Section 15 salary paid by Foreign Government to its employee working in India is taxed under income head Salary in India. However, you can get relaxation from tax if you are not a RESIDENT in India.

Generally, Director is an agent of a Company as Director Work on behalf of company. So the remuneration received by Director is to be taxed under income head of Business. But if Director works in Company as an employee and there exist proper evidence for the same then remuneration received by Director is to be taxed under income head Salary.

No, as per the given fact there does not exist employee-employer relationship. As you get paid in pursuant to your talent and hours you worked and these income to be taxed under business head.

Generally, employees are allowed to avail leave during employment period. Employee can avail leave or if leave is not avail either they collapse or accumulate for future or they are encashed during service period or after retirement. As, it is received from employer for not availing leave it is taxed under income head “Salary”.

Here doesn’t exist any employee and employer relation between you and Central Government. As you are receiving leave encashment on death of your father in capacity of being legal heir. S this amount will not be taxed under income head “Salary”.

As payment is received from employer for voluntary retirement it is taxed as “profit in lieu of salary” under income head salary.

Voluntary retirement payment cannot exceed any of the following :

1. Maximum of three month’s salary for each completed year of servic . Or

2. Salary of the month of retirement multiplied by months left for the employee to retire or for superannuation.

Any salary income is taxed in year on accrue basis or on receive basis, whichever is earlier. Here, Voluntary retirement receipt accrued in first year so it is taxable in first year itself.

Section 10(10C) says that all employees of a company by whatsoever name called including workers and executive are eligible for exemption of voluntary retirement receipt except directors of a company . So, being director of a company you are not eligible for any kind of exemption for voluntary retirement receipt.

Yes, if pension is received from present employer or past employer.

Yes, at a lower slab rates i.e. individual having age 60 years or more :
Income                             %
Upto 3 lakhs                     Nil
3 lakhs to 5 lakhs            10%
5 lakhs to 10 lakhs          20%
Above 10 lakhs                30%

Individual having age 80 years or more :
Income                             %
Upto 5 lakhs                     Nil
5 lakhs to 10 lakhs          20%
Above 10 lakhs                30%

NO

The Bank.

Various deductions are allowed through section 80C for different investment made by person. So, in order to save your pension income you have to make investment. Maximum of 1.5 lakhs of deduction is allowed under section 80C in a year.