Hi, An employee worked in some private Organisation for 30 years and expired during service. Gratuity settled was for 25 years. The respective Management person was saying that the maximum number of years will be taken as only 25 years, even though that employee worked for 30 years. Is there any such Rule under Gratuity Act?
Seek the valuable opinion of fellow experts.
From India, Bharat
Seek the valuable opinion of fellow experts.
From India, Bharat
Dear Bala,
So far as limitation under the Payment of Gratuity Act,1972 is concerned, it is only on the maximum amount of gratuity payable to an employee which stands at Rs.20 lakh.
At times, one can be inadvertent on the actual legal provisions due to lack of in depth reading or heresay. Therefore, you may ask the manager who says so about the statutory ceiling on the no of years of service rendered by the employee, to quote the authority for his statement.
If the employee files a claim before the Controlling Authority under the Act, he is sure to get the arrears of gratuity with a simple interest @ 10% for the entire period of default.
From India, Salem
Most Appreciated Member
6018So far as limitation under the Payment of Gratuity Act,1972 is concerned, it is only on the maximum amount of gratuity payable to an employee which stands at Rs.20 lakh.
At times, one can be inadvertent on the actual legal provisions due to lack of in depth reading or heresay. Therefore, you may ask the manager who says so about the statutory ceiling on the no of years of service rendered by the employee, to quote the authority for his statement.
If the employee files a claim before the Controlling Authority under the Act, he is sure to get the arrears of gratuity with a simple interest @ 10% for the entire period of default.
From India, Salem
Most Appreciated Member
Dear Bala,
Greetings of the day,
Employees are getting gratuity after five years of continuous work in the same company. The Formula of calculation should be Basic Salary * years of service *15/26.Gratuity is a benefit given by the employer to employees. A recently approved amendment by the Centre has increased the maximum limit of gratuity. Now it is tax exempt up to Rs 20 lakh from the previous ceiling of Rs 10 lakh, which comes Section 10(10) of the Income Tax Act. The CBDT Notification no. If Company wishes him to pay maximum number of years will be taken as only 25 years, even though that employee worked for 30 years, it should be considered but every amount above the ceiling should be taxable.
Thanks & Regards,
From,
Sumit Kumar Saxena
From India, Ghaziabad
Contributing Member
Greetings of the day,
Employees are getting gratuity after five years of continuous work in the same company. The Formula of calculation should be Basic Salary * years of service *15/26.Gratuity is a benefit given by the employer to employees. A recently approved amendment by the Centre has increased the maximum limit of gratuity. Now it is tax exempt up to Rs 20 lakh from the previous ceiling of Rs 10 lakh, which comes Section 10(10) of the Income Tax Act. The CBDT Notification no. If Company wishes him to pay maximum number of years will be taken as only 25 years, even though that employee worked for 30 years, it should be considered but every amount above the ceiling should be taxable.
Thanks & Regards,
From,
Sumit Kumar Saxena
From India, Ghaziabad
Contributing Member
Dear Sumit,
Earlier, the maximum amount of gratuity under the PGA,1972 was limited to 20 months salary. But, gradually it was increased in terms of money and as on date it stands at Rs.20lakh. Irrespective of the no of years of qualifying service rendered by the employee it can be limited to the ceiling. But, if the employer wishes he can pay the actual amount exceeding the ceiling. The tax liability in which case is on the employee on whatever the amount in excess of the ceiling. Therefore, it is not necessary to restrict the service to 25 years for it can lead to dispute.
From India, Salem
Most Appreciated Member
Earlier, the maximum amount of gratuity under the PGA,1972 was limited to 20 months salary. But, gradually it was increased in terms of money and as on date it stands at Rs.20lakh. Irrespective of the no of years of qualifying service rendered by the employee it can be limited to the ceiling. But, if the employer wishes he can pay the actual amount exceeding the ceiling. The tax liability in which case is on the employee on whatever the amount in excess of the ceiling. Therefore, it is not necessary to restrict the service to 25 years for it can lead to dispute.
From India, Salem
Most Appreciated Member
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Gratuity Eligibility.pdf
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