Dear Sh. Harikrishnan,
Gratuity is part of my CTC, and the amount is held by the employer. When I asked the question during my joining on the status of the gratuity amount if I resign without completing 5 yrs of service, I was told by them that the money held will be deposited with the statutory bodies. Is there any provision with the Labour office to accept such money held against gratuity for employees?
Pon
From India, Lucknow
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660Gratuity is part of my CTC, and the amount is held by the employer. When I asked the question during my joining on the status of the gratuity amount if I resign without completing 5 yrs of service, I was told by them that the money held will be deposited with the statutory bodies. Is there any provision with the Labour office to accept such money held against gratuity for employees?
Pon
From India, Lucknow
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Dear Mr. Ponraj,
Even though the CTC is calculated with all the benefits, some allowances and Superannuation Funds will be released only as per the rules. For getting the Gratuity, one must serve at least for 5 years. If one leaves before fulfilling the terms of engagement, then obviously one will lose the benefits. Once you are not eligible to receive the Gratuity, you cannot get it.
From India, Kumbakonam
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Even though the CTC is calculated with all the benefits, some allowances and Superannuation Funds will be released only as per the rules. For getting the Gratuity, one must serve at least for 5 years. If one leaves before fulfilling the terms of engagement, then obviously one will lose the benefits. Once you are not eligible to receive the Gratuity, you cannot get it.
From India, Kumbakonam
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Bhaskar, My question is different. I am not asking for eligibility. I just asked what my employer told me is right or not? Read my post once again. Pon
From India, Lucknow
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From India, Lucknow
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It is not required to deposit with anyone in case of resignation cases. It is required only in case of accidental death while on duty and natural death those who worked more than 1 year service.
From India, Kumbakonam
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From India, Kumbakonam
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Dear Mr. Pon,
The following is your query through your last but one post: "Gratuity is part of my CTC, and the amount is held by the employer. When I asked the question during my joining on the status of the gratuity amount if I resign without completing 5 years of service, I was told by them that the money held will be deposited with the statutory bodies. Is there any such provision with the Labour office to accept such money held against gratuity of employees?"
The following is my reply:
1. (a) The Payment of Gratuity Act does not require the employer to deposit the gratuity amount with the statutory bodies/authorities in respect of those who leave the employer's service or resign without completing five years of continuous service.
(b) The Payment of Gratuity Act requires the employer to deposit the gratuity amount with the statutory bodies/authorities only if there is a dispute regarding the person to whom the gratuity amount is payable or the quantum of gratuity payable. This would arise in the case of employees who leave the services of the company, resign, or die while in service after completing five years of continuous service. Once this deposit is made, and the receipt is obtained, the employer's liability concerning the quantum of gratuity deposited is discharged. It is worth noting that if the employer makes a delayed payment of gratuity to an employee, they are liable to pay interest on the gratuity amount, which is extinguished once the deposit is made.
2. The CTC (Cost to the Company), to the best of my knowledge (I am open to correction on this point), is used to assess the company's liability in respect of an employee and is mostly used for costing purposes. CTC has no relevance to the liability under the Payment of Gratuity.
3. Some employers take a group insurance for gratuity liability (I presume I am using the correct phrase here). The company issuing this policy assesses the employer's liability to pay gratuity over a specified period based on the provisions of the Payment of Gratuity Act and, in certain cases, on the rules/regulations in force in the establishment for gratuity payments. It should be noted that if an employee is entitled to better gratuity terms than under the PG Act, those terms will prevail. The age profile of entitled employees is also considered. The Insurance Company collects a premium, invests it, and pays out when gratuity is due, subject to coverage limits. Employers have faced issues when the insurance coverage falls short, leading to legal disputes.
4. In your case, the amount paid to the Insurance company may be represented as a deposit with statutory authorities.
5. In cases without insurance, a "Gratuity Fund" account head is created in the company's books. Gratuity liability for all employees on a particular date is calculated, and the amount is credited to the "Gratuity Fund." If an employee leaves before five years, the calculated amount for that employee is debited from the fund.
I hope this clarifies the issues raised by you.
With regards,
From India, Madras
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The following is your query through your last but one post: "Gratuity is part of my CTC, and the amount is held by the employer. When I asked the question during my joining on the status of the gratuity amount if I resign without completing 5 years of service, I was told by them that the money held will be deposited with the statutory bodies. Is there any such provision with the Labour office to accept such money held against gratuity of employees?"
The following is my reply:
1. (a) The Payment of Gratuity Act does not require the employer to deposit the gratuity amount with the statutory bodies/authorities in respect of those who leave the employer's service or resign without completing five years of continuous service.
(b) The Payment of Gratuity Act requires the employer to deposit the gratuity amount with the statutory bodies/authorities only if there is a dispute regarding the person to whom the gratuity amount is payable or the quantum of gratuity payable. This would arise in the case of employees who leave the services of the company, resign, or die while in service after completing five years of continuous service. Once this deposit is made, and the receipt is obtained, the employer's liability concerning the quantum of gratuity deposited is discharged. It is worth noting that if the employer makes a delayed payment of gratuity to an employee, they are liable to pay interest on the gratuity amount, which is extinguished once the deposit is made.
2. The CTC (Cost to the Company), to the best of my knowledge (I am open to correction on this point), is used to assess the company's liability in respect of an employee and is mostly used for costing purposes. CTC has no relevance to the liability under the Payment of Gratuity.
3. Some employers take a group insurance for gratuity liability (I presume I am using the correct phrase here). The company issuing this policy assesses the employer's liability to pay gratuity over a specified period based on the provisions of the Payment of Gratuity Act and, in certain cases, on the rules/regulations in force in the establishment for gratuity payments. It should be noted that if an employee is entitled to better gratuity terms than under the PG Act, those terms will prevail. The age profile of entitled employees is also considered. The Insurance Company collects a premium, invests it, and pays out when gratuity is due, subject to coverage limits. Employers have faced issues when the insurance coverage falls short, leading to legal disputes.
4. In your case, the amount paid to the Insurance company may be represented as a deposit with statutory authorities.
5. In cases without insurance, a "Gratuity Fund" account head is created in the company's books. Gratuity liability for all employees on a particular date is calculated, and the amount is credited to the "Gratuity Fund." If an employee leaves before five years, the calculated amount for that employee is debited from the fund.
I hope this clarifies the issues raised by you.
With regards,
From India, Madras
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Hello,
I recently got retrenched and paid a severance package of 3 months (3 years of service completed). The problem is the company has deducted tax on it, and they haven't given Form-16 yet. How can I claim the tax benefit under Section 25F(b) (15 days for every year)? Does the Form 16 must say the word 'Retrenchment Benefit'? Do the companies that are laying off people need to take special permission from somewhere (maybe the labor department or anywhere) before they can add the word 'retrenchment' in Form 16?
Regarding the tax benefit, does 15 days' salary mean monthly salary or only Basic + DA? Kindly help.
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I recently got retrenched and paid a severance package of 3 months (3 years of service completed). The problem is the company has deducted tax on it, and they haven't given Form-16 yet. How can I claim the tax benefit under Section 25F(b) (15 days for every year)? Does the Form 16 must say the word 'Retrenchment Benefit'? Do the companies that are laying off people need to take special permission from somewhere (maybe the labor department or anywhere) before they can add the word 'retrenchment' in Form 16?
Regarding the tax benefit, does 15 days' salary mean monthly salary or only Basic + DA? Kindly help.
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