It is improper to show Gratuity amount as a part of CTC with the following reasons:
1. There is no monthly outgo payment towards Gratuity against any employee.
2. Gratuity is payable after 5 years continuous service on last drawn salary than how come employer project CTC amount on running salary?
3. If an employer shows Gratuity contribution as part of salary (CTC) then it should be paid to the employee on separation before completion of 5 years service as the so called contribution shown as CTC against gratuity is not payable by employer to the gratuity fund.
4. Companies are availing tax benefit on accrued gratuity amount.
5. As regards to PF, ESI contributions, it is monthly outgo from eligible employees from day one and the monies goes to Govt. Treasury every month. Whereas the gratuity amount they need not pay to the Trust and or LIC every month. Thus showing gratuity amount as CTC in employees offer and or Appraisal in not justified.
Regards,
Suresh
From India, Thane
2461. There is no monthly outgo payment towards Gratuity against any employee.
2. Gratuity is payable after 5 years continuous service on last drawn salary than how come employer project CTC amount on running salary?
3. If an employer shows Gratuity contribution as part of salary (CTC) then it should be paid to the employee on separation before completion of 5 years service as the so called contribution shown as CTC against gratuity is not payable by employer to the gratuity fund.
4. Companies are availing tax benefit on accrued gratuity amount.
5. As regards to PF, ESI contributions, it is monthly outgo from eligible employees from day one and the monies goes to Govt. Treasury every month. Whereas the gratuity amount they need not pay to the Trust and or LIC every month. Thus showing gratuity amount as CTC in employees offer and or Appraisal in not justified.
Regards,
Suresh
From India, Thane
Dear Colleagues,
Since gratuity is a cost to the company and legal obligation, it is perfectly alright to show it as a part of CTC just as PF and ESI.
There may not be monthly outgo, but funding provisions have to be made in books of accounts for its future liability.
But what is condemnable is deduction by the Employer towards gratuity from employees' salary every month. It is illegal and if it is not stopped forthwith, he should be dragged before Authorities for serious breach of law and punishable offense.
Regards,
Vinayak Nagarkar
HR- Consultant
From India, Mumbai
Since gratuity is a cost to the company and legal obligation, it is perfectly alright to show it as a part of CTC just as PF and ESI.
There may not be monthly outgo, but funding provisions have to be made in books of accounts for its future liability.
But what is condemnable is deduction by the Employer towards gratuity from employees' salary every month. It is illegal and if it is not stopped forthwith, he should be dragged before Authorities for serious breach of law and punishable offense.
Regards,
Vinayak Nagarkar
HR- Consultant
From India, Mumbai
Dear Hemlata,
There are lot of opinion on your query. Let us understand the mathematics behind TCTC/CTC.
Let us consider the TCTC/CTC per annum is INR 3,60,000/- i.e per month INR 30,000/-. Let us also consider the components includes at CTC are - (Basic, HRA, Allowences = Monthly gross) + Employer's portion of PF & ESI(if applicable) + Statutory Bonus (if applicable) + Gratuity + Any other payment proposed to pay the employee.
Therefore, to arrive at monthly gross it is essential to deduct other components i.e from 30,000/- it will be required to deduct Employer's portion of PF & ESI, Statutory Bonus, Gratuity & Any other payment.
Now , we will arrive Basic , HRA & Allowances.
When we offer employment , now a days most of the employers are showing TCTC/CTC . There are Organizations who process pay roll from CTC which is technically wrong. Offering CTC is one part, but when we will process pay roll it should be from monthly gross otherwise confusion will continue.
The offer of the Organization may be (Basic + HRA + Allowances = Monthly gross) * 12 = Yearly gross + Yearly Employer's contribution to PF & ESI + Yearly Statutory Bonus + Yearly Gratuity Liability + Yearly any other liability. Pay roll will be on the basis of monthly gross only.
Trust this will satisfy your query. For further clarification you may cntact me.
Thanks & Regds.,
S K Bandyopadhyay( Howrah, WB)
From India, New Delhi
There are lot of opinion on your query. Let us understand the mathematics behind TCTC/CTC.
Let us consider the TCTC/CTC per annum is INR 3,60,000/- i.e per month INR 30,000/-. Let us also consider the components includes at CTC are - (Basic, HRA, Allowences = Monthly gross) + Employer's portion of PF & ESI(if applicable) + Statutory Bonus (if applicable) + Gratuity + Any other payment proposed to pay the employee.
Therefore, to arrive at monthly gross it is essential to deduct other components i.e from 30,000/- it will be required to deduct Employer's portion of PF & ESI, Statutory Bonus, Gratuity & Any other payment.
Now , we will arrive Basic , HRA & Allowances.
When we offer employment , now a days most of the employers are showing TCTC/CTC . There are Organizations who process pay roll from CTC which is technically wrong. Offering CTC is one part, but when we will process pay roll it should be from monthly gross otherwise confusion will continue.
The offer of the Organization may be (Basic + HRA + Allowances = Monthly gross) * 12 = Yearly gross + Yearly Employer's contribution to PF & ESI + Yearly Statutory Bonus + Yearly Gratuity Liability + Yearly any other liability. Pay roll will be on the basis of monthly gross only.
Trust this will satisfy your query. For further clarification you may cntact me.
Thanks & Regds.,
S K Bandyopadhyay( Howrah, WB)
From India, New Delhi
Hi,
Yes, it is legal. Gratuity is a part of CTC ( Cost to company). A few companies have Gratuity fund with banks where they deposit gratuity for all employees. Gratuity can be deducted from an employees CTC but not gross salary. Most of the companies now a days prefer keeping everything in CTC so they know their total cost involved on an employee.
Hope thsi helps.
Regards,
Shweta Gehlot
From India, Delhi
Yes, it is legal. Gratuity is a part of CTC ( Cost to company). A few companies have Gratuity fund with banks where they deposit gratuity for all employees. Gratuity can be deducted from an employees CTC but not gross salary. Most of the companies now a days prefer keeping everything in CTC so they know their total cost involved on an employee.
Hope thsi helps.
Regards,
Shweta Gehlot
From India, Delhi
In simplified terms Gratuity should pay (bear cost) by employer/buisiness owner/company/organisation. It should be cost to company (employer) and should not be cost to employee. Mohan Nair.
From India, Mumbai
From India, Mumbai
Dear Hemlata, Employer can show this amount in employee’s CTC because this is a part of company expenses for Employee Regards CP Singh
From India, Noida
From India, Noida
Dear colleagues,
Those forum members who have opined about gratuity being part of CTC, are missing the core point of the query. The issue is the employer has deducted from the salary of the employees an amount towards the gratuity and query is posed whether this is alright as per the Gratuity Act. Myself and several others have categorically stated that this is illegal.
Regards,
Vinayak Nagarkar
HR- Consultant
From India, Mumbai
Those forum members who have opined about gratuity being part of CTC, are missing the core point of the query. The issue is the employer has deducted from the salary of the employees an amount towards the gratuity and query is posed whether this is alright as per the Gratuity Act. Myself and several others have categorically stated that this is illegal.
Regards,
Vinayak Nagarkar
HR- Consultant
From India, Mumbai
Dear Mr. Vinayak,
Request you to read my earlier posting properly. Gratuity is a part of CTC/TCTC or not is not the problem. Because CTC/TCTC has no legal stand.
It is the problem of processing pay roll. If any organization starts processing pay roll and show it to pay slip from monthly CTC/TCTC level and then deduct the items included in CTC along with Gratuity ,then it will be technical problem to convince any statutory authority. CTC is internal matter of the Organization. If the same Organization process payroll from monthly gross after internally adjusting all deductions from CTC including Gratuity, then question of deducting Gratuity from salary will not arise.
Trust this will satisfy your query.
Thanks & Regds.,
S K Bandyopadhyay
From India, New Delhi
Request you to read my earlier posting properly. Gratuity is a part of CTC/TCTC or not is not the problem. Because CTC/TCTC has no legal stand.
It is the problem of processing pay roll. If any organization starts processing pay roll and show it to pay slip from monthly CTC/TCTC level and then deduct the items included in CTC along with Gratuity ,then it will be technical problem to convince any statutory authority. CTC is internal matter of the Organization. If the same Organization process payroll from monthly gross after internally adjusting all deductions from CTC including Gratuity, then question of deducting Gratuity from salary will not arise.
Trust this will satisfy your query.
Thanks & Regds.,
S K Bandyopadhyay
From India, New Delhi
Dear Mr Bandopadhyay,
Let me correct you that I have no query and I have given my views on the original poster's query. Some colleagues have digressed and opined on gratuity being part of CTC or not which is not what the querist wants.
Regards,
Vinayak Nagarkar
HR- Consultant
From India, Mumbai
Let me correct you that I have no query and I have given my views on the original poster's query. Some colleagues have digressed and opined on gratuity being part of CTC or not which is not what the querist wants.
Regards,
Vinayak Nagarkar
HR- Consultant
From India, Mumbai
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Gratuity-Contin uous Service-countin g broken period with same employer-Madras HC Judgment.docx
FORM-F-NOMINATI ON OF GRATUITY.pdf
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