Hi everyone, My self Sunil Rao HR in an mfg company. what is the calculation of Gratuity in the case of the death of an employee?
From India, Sohna
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From India, Sohna
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Calculation of Gratuity in the Case of an Employee's Death
In the unfortunate event of an employee's death, the calculation of gratuity is still applicable as per the Payment of Gratuity Act, 1972 in India. Gratuity is a form of retirement benefit that is paid by the employer to an employee for the services rendered by the employee. Here is how the gratuity is calculated in the case of an employee's death:
1. Eligibility Criteria: For the gratuity to be applicable in the event of an employee's death, the employee should have completed a minimum of 5 years of continuous service with the employer as per the Act.
2. Calculation Formula: The gratuity amount is calculated using the formula: Last drawn salary (basic salary + dearness allowance) * number of completed years of service * 15 / 26. Here, the 15/26 factor represents 15 days of wages for each completed year of service.
3. Maximum Limit: As per the Act, the maximum amount of gratuity payable is capped at Rs. 20 lakhs in India, irrespective of the actual calculation.
4. Processing: Upon the unfortunate demise of an employee, the employer is responsible for processing and disbursing the gratuity amount to the nominee or legal heir of the deceased employee.
5. Nominee Details: It is crucial for the employee to have nominated a family member or legal heir as the nominee for gratuity payments. In the absence of a nominee, the legal heirs of the deceased employee are entitled to receive the gratuity amount.
6. Tax Implications: It's important to note that gratuity received in the event of an employee's death is exempt from income tax as per the Income Tax laws in India.
By following these steps, the calculation and disbursement of gratuity in the case of an employee's death can be handled in a fair and compliant manner, providing the rightful benefits to the deceased employee's family or legal heirs.
From India, Gurugram
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141In the unfortunate event of an employee's death, the calculation of gratuity is still applicable as per the Payment of Gratuity Act, 1972 in India. Gratuity is a form of retirement benefit that is paid by the employer to an employee for the services rendered by the employee. Here is how the gratuity is calculated in the case of an employee's death:
1. Eligibility Criteria: For the gratuity to be applicable in the event of an employee's death, the employee should have completed a minimum of 5 years of continuous service with the employer as per the Act.
2. Calculation Formula: The gratuity amount is calculated using the formula: Last drawn salary (basic salary + dearness allowance) * number of completed years of service * 15 / 26. Here, the 15/26 factor represents 15 days of wages for each completed year of service.
3. Maximum Limit: As per the Act, the maximum amount of gratuity payable is capped at Rs. 20 lakhs in India, irrespective of the actual calculation.
4. Processing: Upon the unfortunate demise of an employee, the employer is responsible for processing and disbursing the gratuity amount to the nominee or legal heir of the deceased employee.
5. Nominee Details: It is crucial for the employee to have nominated a family member or legal heir as the nominee for gratuity payments. In the absence of a nominee, the legal heirs of the deceased employee are entitled to receive the gratuity amount.
6. Tax Implications: It's important to note that gratuity received in the event of an employee's death is exempt from income tax as per the Income Tax laws in India.
By following these steps, the calculation and disbursement of gratuity in the case of an employee's death can be handled in a fair and compliant manner, providing the rightful benefits to the deceased employee's family or legal heirs.
From India, Gurugram
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc