According to one of the government circular, it can not be. I will find and attach it here asap.
From India, Ahmadabad
Acknowledge(0)
Amend(0)
3From India, Ahmadabad
Acknowledge(0)Amend(0)
Dear colleagues,
The concept of CTC is coined by the employer to determine what it costs to hire an employee. The question of legality or otherwise is irrelevant and not applicable. The payment of gratuity prior to law and after is meant to induce employees to stay longer. But if he leaves before completing five years' service, he chooses to forgo gratuity. It is not the employer's fault. Therefore, including gratuity in CTC is well within the employer's prerogative.
Regards,
V.L. Nagarkar
HR Consultant
From India, Mumbai
Acknowledge(4)
Amend(0)
The concept of CTC is coined by the employer to determine what it costs to hire an employee. The question of legality or otherwise is irrelevant and not applicable. The payment of gratuity prior to law and after is meant to induce employees to stay longer. But if he leaves before completing five years' service, he chooses to forgo gratuity. It is not the employer's fault. Therefore, including gratuity in CTC is well within the employer's prerogative.
Regards,
V.L. Nagarkar
HR Consultant
From India, Mumbai
Acknowledge(4)Amend(0)
Dear Mr. Amit,
To the best of my understanding, you are saying that once the gratuity is considered in CTC while giving employment to the new employee, then the said amount should be given to the said employee irrespective of whether he has completed 5 years or not. Principally, it should be paid; however, certain industries do not pay under the shelter of the 5 years condition.
From India, Hyderabad
Acknowledge(0)Amend(0)
To the best of my understanding, you are saying that once the gratuity is considered in CTC while giving employment to the new employee, then the said amount should be given to the said employee irrespective of whether he has completed 5 years or not. Principally, it should be paid; however, certain industries do not pay under the shelter of the 5 years condition.
From India, Hyderabad
Acknowledge(0)Amend(0)
Employees should not be attracted by the amount of CTC. They should ignore the amounts shown as employers' contribution to PF, ESI, Gratuity, conveyance, food, etc. They should consider the amounts other than employers' contribution or expenses for employees as the salary. Then the question of refund of gratuity won't arise. The CTC is not recognized as a legal wage under any labor legislation in India.
From India, Thiruvananthapuram
Acknowledge(1)Amend(0)
From India, Thiruvananthapuram
Acknowledge(1)Amend(0)
Agreed with KORGAONKAR K A's views that Gratuity is part of CTC. Any payment, whether made directly or indirectly by the company in the name of the employee, should be added and considered part of CTC. However, the payment is only subject to completion of the terms and conditions applicable.
Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
Acknowledge(1)Amend(0)
Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
Acknowledge(1)Amend(0)
The CTC has got direct bearing on Indian Accounting Standard 19 issued by the Instt. of Chartered Accountants/Govt of India which deals with Employee related costs. Every employer should account for all employee related expenses/cost relevant to the year in the respective year’s accounts, whether paid or not but on accrual basis in accordance with the AS-19. On the same principle the CTC also being computed in many of the firms. Ofcourse various methodology is being followed by the employers as per their own past practices, HR policies, pattern generally followed by other cos in the same field. It is possible they show a few items in CTC exchanged with the candidates which may vary from what is accounted in their accounts as “Employees’ Benefits”. It’s also possible many a time varies from person to person. Since CTC concept is not present and mandatory as per Payment of Wages Act etc no one can argue what is IN and what is kept OUTside the ambit of CTC. The extract from the AS-19 is reproduced here for the benefit of members as a ready ref. Detailed AS is attached.
xxxxx xxxxxxxxxx
Indian Accounting Standard (Ind AS) 19 Employee Benefits
5) Employee benefits include:
(a) short-term employee benefits, such as the following, if expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services: (i) wages, salaries and social security contributions;
(ii) paid annual leave and paid sick leave;
(iii) profit-sharing and bonuses; and
(iv) non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees;
(b) post-employment benefits, such as the following:
(i) retirement benefits (eg pensions and lump sum payments on retirement); and
(ii) other post-employment benefits, such as post-employment life insurance and postemployment medical care;
(c) other long-term employee benefits, such as the following:
(i) long-term paid absences such as long-service leave or sabbatical leave;
(ii) jubilee or other long-service benefits; and (iii) long-term disability benefits; and
(d) termination benefits.
6) Employee benefits include benefits provided either to employees or to their dependants or beneficiaries and may be settled by payments (or the provision of goods or services) made either directly to the employees, to their spouses, children or other dependants or to others, such as insurance companies.
7) An employee may provide services to an entity on a full-time, part-time, permanent, casual or temporary basis. For the purpose of this Standard, employees include directors and other management personnel.
Definitions:
8) The following terms are used in this Standard with the meanings specified:
Definitions of employee benefits Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment.
Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service.
Post-employment benefits are employee benefits (other than termination benefits and shortterm employee benefits) that are payable after the completion of employment.
Other long-term employee benefits are all employee benefits other than short-term employee benefits, post-employment benefits and termination benefits.
Termination benefits are employee benefits provided in exchange for the termination of an employee’s employment as a result of either:
(a) an entity’s decision to terminate an employee’s employment before the normal retirement date; or (b) an employee’s decision to accept an offer of benefits in exchange for the termination of employment. Xxxxxxxx xxxxxxxxxxxxxxxxxx
From India, Bangalore
Acknowledge(2)Amend(0)
xxxxx xxxxxxxxxx
Indian Accounting Standard (Ind AS) 19 Employee Benefits
5) Employee benefits include:
(a) short-term employee benefits, such as the following, if expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services: (i) wages, salaries and social security contributions;
(ii) paid annual leave and paid sick leave;
(iii) profit-sharing and bonuses; and
(iv) non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees;
(b) post-employment benefits, such as the following:
(i) retirement benefits (eg pensions and lump sum payments on retirement); and
(ii) other post-employment benefits, such as post-employment life insurance and postemployment medical care;
(c) other long-term employee benefits, such as the following:
(i) long-term paid absences such as long-service leave or sabbatical leave;
(ii) jubilee or other long-service benefits; and (iii) long-term disability benefits; and
(d) termination benefits.
6) Employee benefits include benefits provided either to employees or to their dependants or beneficiaries and may be settled by payments (or the provision of goods or services) made either directly to the employees, to their spouses, children or other dependants or to others, such as insurance companies.
7) An employee may provide services to an entity on a full-time, part-time, permanent, casual or temporary basis. For the purpose of this Standard, employees include directors and other management personnel.
Definitions:
8) The following terms are used in this Standard with the meanings specified:
Definitions of employee benefits Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment.
Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service.
Post-employment benefits are employee benefits (other than termination benefits and shortterm employee benefits) that are payable after the completion of employment.
Other long-term employee benefits are all employee benefits other than short-term employee benefits, post-employment benefits and termination benefits.
Termination benefits are employee benefits provided in exchange for the termination of an employee’s employment as a result of either:
(a) an entity’s decision to terminate an employee’s employment before the normal retirement date; or (b) an employee’s decision to accept an offer of benefits in exchange for the termination of employment. Xxxxxxxx xxxxxxxxxxxxxxxxxx
From India, Bangalore
Acknowledge(2)Amend(0)
Dear CTC itself is not a legal word, so far its depend company to company what components they add in CTC or not.
From India, Faridabad
Acknowledge(0)Amend(0)
From India, Faridabad
Acknowledge(0)Amend(0)
The Gratuity is shown in CTC and if an employee leaves the company, before 5 years period, whether the employee should pay the accrued amount or not !
From Spain, Burgos
Acknowledge(0)Amend(0)
From Spain, Burgos
Acknowledge(0)Amend(0)
Dear MURALI_D02,
Please go through the below-given links and find out the answer to your query. All the best.
https://www.google.com/url?q=https:/...H3CnXfZdNF_GSI
https://www.google.com/url?q=https:/...RJTyh8fuiy4WuO
https://www.google.com/url?q=https:/...2YKPzfk8pS_oup
https://www.google.com/url?q=https:/...REIxk35L13YGqo
From India, Mumbai
Acknowledge(0)Amend(0)
0
0
Please go through the below-given links and find out the answer to your query. All the best.
https://www.google.com/url?q=https:/...H3CnXfZdNF_GSI
https://www.google.com/url?q=https:/...RJTyh8fuiy4WuO
https://www.google.com/url?q=https:/...2YKPzfk8pS_oup
https://www.google.com/url?q=https:/...REIxk35L13YGqo
From India, Mumbai
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-[response] (1 Acknowledge point)
0
0
Dear Murali,
Hope your query stands clarified from the reply and attachments given by Korgaonkar Sir. However, to set the record straight, as per Section 4(1) of the Payment of Gratuity Act 1972, the liability to pay gratuity arises only after continuous service of five years. In other words, before the completion of the eligibility period of five years, even if the CTC mentions gratuity as having accrued all along, there is NO legal liability to pay gratuity. Nonetheless, the employer can still pay the accrued amount as a welfare measure, but the Income Tax exemption would not apply, and it will be treated as income to the recipient.
PS. Please be mindful before sending any query. The gratuity is shown in CTC, and if an employee leaves the company before the 5-year period, whether the employee should pay the accrued amount or not.
Thank you.
From India, Mumbai
Acknowledge(0)Amend(0)
0
0
Hope your query stands clarified from the reply and attachments given by Korgaonkar Sir. However, to set the record straight, as per Section 4(1) of the Payment of Gratuity Act 1972, the liability to pay gratuity arises only after continuous service of five years. In other words, before the completion of the eligibility period of five years, even if the CTC mentions gratuity as having accrued all along, there is NO legal liability to pay gratuity. Nonetheless, the employer can still pay the accrued amount as a welfare measure, but the Income Tax exemption would not apply, and it will be treated as income to the recipient.
PS. Please be mindful before sending any query. The gratuity is shown in CTC, and if an employee leaves the company before the 5-year period, whether the employee should pay the accrued amount or not.
Thank you.
From India, Mumbai
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-[The user's reply contains accurate information regarding the legal aspects of showing gratuity as part of CTC as per the Payment of Gratuity Act 1972. The clarification provided aligns with the requirement of completing five years of continuous service for the gratuity liability to arise. Additionally, mentioning the impact on income tax exemption is insightful.] (1 Acknowledge point)
0
0
Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
CiteHR.AI
(Fact Checked)-The information provided in the user reply regarding the treatment of gratuity in Cost to Company (CTC) calculations is accurate based on Indian Accounting Standard 19 on Employee Benefits. Thank you for sharing this detailed explanation. (1 Acknowledge point)