Greetings Saunee,
Gratuity provisions are made by the employer and added as part of CTC as follows. If the wages were Rs. 5000, the gratuity calculation will be Rs. 5000 X 15/26 = Rs. 2885 per annum. This amount is added to the CTC per annum and is approximately equivalent to 4.80% of the wages earned by the employee. Some companies have a Group Gratuity scheme with LIC of India and pay the Gratuity liability based on an actuarial valuation furnished by LIC. If an employee who is eligible to receive Gratuity leaves the company, the company works out the liability and submits an application to LIC, which then releases a cheque favoring the Group Gratuity fund of the company. Subsequently, the company releases the cheque to the employee.
Regards,
M.V. Kannan
From India, Madras
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270Gratuity provisions are made by the employer and added as part of CTC as follows. If the wages were Rs. 5000, the gratuity calculation will be Rs. 5000 X 15/26 = Rs. 2885 per annum. This amount is added to the CTC per annum and is approximately equivalent to 4.80% of the wages earned by the employee. Some companies have a Group Gratuity scheme with LIC of India and pay the Gratuity liability based on an actuarial valuation furnished by LIC. If an employee who is eligible to receive Gratuity leaves the company, the company works out the liability and submits an application to LIC, which then releases a cheque favoring the Group Gratuity fund of the company. Subsequently, the company releases the cheque to the employee.
Regards,
M.V. Kannan
From India, Madras
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