CAF-2 · Chapter 5 · Question 7 of 10
Mr. Fahad resigned from his job and received Rs. 500,000 from an unapproved gratuity fund. He has never received any gratuity before. What amount of this gratuity will be exempt from tax?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) D) Rs. 75,000
Explanation
Gratuity received from an unapproved scheme or fund is exempt up to Rs. 75,000 or 50% of the amount receivable (Rs. 250,000), whichever is lower. Thus, Rs. 75,000 is exempt.
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