2. Gratuities: Are you a government employee or servant? If yes, then under the provisions of Section 10 (10) of the Income Tax Act, any death-cum-retirement gratuity is completely tax exempted. However, when it comes to private sector the gratuity that an employee receives on his retirement or on becoming injured or on termination or any gratuity received by his widow, children or dependants on his death is exempted, but it is subjected to certain conditions. The maximum amount of exemption allowed is 3, 50,000 furthermore it is subjected to certain other limitations. Thus, government employees are more benefited than their private counterparts.

3. Leave encashment: Any cash amount that is received as compensation for earned leave during the time of retirement is considered to be tax exempt under Section 10 (10AA) and this is applicable to state and central employees. For others the exemption is limited to maximum of 10 months leave encashment, which will be based on their 10 month average salary. Moreover, the maximum amount specified is 3, 00,000.