Dear Nagaraju,
First, ensure your firm and you are covered under the Payment of Gratuity Act.
Have you quit this firm? or not. If yes, file our application in FORM " I "-- Application of gratuity by an employee" to your HR and obtain acknowledgement. Also send a copy to the Controlling Authority, Officer under the Payment of Gratuity Act. Following are the other Forms involved in gratuity administration:
FORM I--Application of gratuity by an employee (specimen form is attached)
FORM J--Application of gratuity by a nominee
FORM K--Application of gratuity by a legal heir
FORM L--Notice for payment of gratuity
FORM M--Notice rejecting claim for payment of gratuity
FORM N--Application for direction
FORM O--Notice for appearance before the controlling authority.
I hope if you follow up vigorously there is a possibility of a gain.
From India, Bangalore
1077First, ensure your firm and you are covered under the Payment of Gratuity Act.
Have you quit this firm? or not. If yes, file our application in FORM " I "-- Application of gratuity by an employee" to your HR and obtain acknowledgement. Also send a copy to the Controlling Authority, Officer under the Payment of Gratuity Act. Following are the other Forms involved in gratuity administration:
FORM I--Application of gratuity by an employee (specimen form is attached)
FORM J--Application of gratuity by a nominee
FORM K--Application of gratuity by a legal heir
FORM L--Notice for payment of gratuity
FORM M--Notice rejecting claim for payment of gratuity
FORM N--Application for direction
FORM O--Notice for appearance before the controlling authority.
I hope if you follow up vigorously there is a possibility of a gain.
From India, Bangalore
Dear Friends,
Gratuity can't be part of CTC.
There are two reasons.
1. It is a liability which incurred only on Employer.
2. As per Income Tax Act, Organisation can show their cost if organisation is going to pay on that particular financial year.
But yeah it's a cost to the company which is applicable only after 5 Years or 4 Years 240 days of continuous service of employee.
If an organisation has mention the Gratuity amount in the Appointment Letter you can claim that.
For reference kindly read Income Tax Act & Gratuity Act.
From India, Hyderabad
Gratuity can't be part of CTC.
There are two reasons.
1. It is a liability which incurred only on Employer.
2. As per Income Tax Act, Organisation can show their cost if organisation is going to pay on that particular financial year.
But yeah it's a cost to the company which is applicable only after 5 Years or 4 Years 240 days of continuous service of employee.
If an organisation has mention the Gratuity amount in the Appointment Letter you can claim that.
For reference kindly read Income Tax Act & Gratuity Act.
From India, Hyderabad
Dear all,
my views(MV) on the above post of a member from Hyderabad, for clarity purpose-
....."Dear Friends,
Gratuity can't be part of CTC.
There are two reasons.
1. It is a liability which incurred only on Employer."
= (MV) Of course gratuity is a liability and is to be incurred only by employee. Which means there should be no 'recovery' or 'contribution' from employees' like EPF. One shouldn't get confused where CTC involved where the gratuity amount is also shown under 'employees' cost to Co.
"2. As per Income Tax Act, Organisation can show their cost if organisation is going to pay on that particular financial year."
= (MV) Pl.be clear, gratuity 'is paid' to the employees (only when) leaving an employer subject to eligibility under the Payment of Gratuity Act. Whereas accounting for gratuity is some thing different. As everyone knows 'gratuity' becomes payable(becoming a "liability to pay') only after completion of 5 yrs (4 yrs+240 days) of continuous service with the very same employer. One will have doubt then what happens. If the employee continues with very same employer, the employer has to 'compute & earmark' that much 'gratuity' money and show in their Accounts as a 'Provision' for future payment every year till he leaves either upon(i)resignation (ii) retirement (iii) death (vi) relieved on medical/health grounds. When this "Provision" thus made EVERY YEAR is a part of 'Business Expenses' towards 'Employees' Benefits'. This provisioned money is administered - either in (i) a Gratuity fund created by the employer for meeting 'gratuity liability' in which case this fund money remains with the employer or (ii) remitted to the gratuity fund managers like LIC.
Here what is important for every employee to note is where a CTC is finalised as a package as in the appointment order it does not mean the employee doesn't get that much money either in the monthly salary (take home) from day one or at the year end. This entitled, packaged money becomes payable only when he/she quits & that too after 5 yrs (4+240 days) service without a break. This much of money is totally lost if there is a break-in-service or quits before 5 yrs. Therefore one who accepts CTC should be well aware of this fact and shouldn't be carried away when the CTC package looks fat by including the 'Gratuity' as a part of CTC.
xxxxx
From India, Bangalore
my views(MV) on the above post of a member from Hyderabad, for clarity purpose-
....."Dear Friends,
Gratuity can't be part of CTC.
There are two reasons.
1. It is a liability which incurred only on Employer."
= (MV) Of course gratuity is a liability and is to be incurred only by employee. Which means there should be no 'recovery' or 'contribution' from employees' like EPF. One shouldn't get confused where CTC involved where the gratuity amount is also shown under 'employees' cost to Co.
"2. As per Income Tax Act, Organisation can show their cost if organisation is going to pay on that particular financial year."
= (MV) Pl.be clear, gratuity 'is paid' to the employees (only when) leaving an employer subject to eligibility under the Payment of Gratuity Act. Whereas accounting for gratuity is some thing different. As everyone knows 'gratuity' becomes payable(becoming a "liability to pay') only after completion of 5 yrs (4 yrs+240 days) of continuous service with the very same employer. One will have doubt then what happens. If the employee continues with very same employer, the employer has to 'compute & earmark' that much 'gratuity' money and show in their Accounts as a 'Provision' for future payment every year till he leaves either upon(i)resignation (ii) retirement (iii) death (vi) relieved on medical/health grounds. When this "Provision" thus made EVERY YEAR is a part of 'Business Expenses' towards 'Employees' Benefits'. This provisioned money is administered - either in (i) a Gratuity fund created by the employer for meeting 'gratuity liability' in which case this fund money remains with the employer or (ii) remitted to the gratuity fund managers like LIC.
Here what is important for every employee to note is where a CTC is finalised as a package as in the appointment order it does not mean the employee doesn't get that much money either in the monthly salary (take home) from day one or at the year end. This entitled, packaged money becomes payable only when he/she quits & that too after 5 yrs (4+240 days) service without a break. This much of money is totally lost if there is a break-in-service or quits before 5 yrs. Therefore one who accepts CTC should be well aware of this fact and shouldn't be carried away when the CTC package looks fat by including the 'Gratuity' as a part of CTC.
xxxxx
From India, Bangalore
Pl.note that above sentence should stand corrected as follows: (Error is regretted.) = (MV) Of course gratuity is a liability and is to be incurred only by employer.
From India, Bangalore
From India, Bangalore
1) Many of the organization during salary fitment they will show the gratuity amount as your part of ctc.
2) but during issuing appointment letter, they will mention in your appointment letter that you will be entitled for gratuity as per payment of gratuity act
2) Gratuity is Part of CTC but payable only after the completion of 5 years of service and eligibility should be 4 years 240 days.
From India, undefined
2) but during issuing appointment letter, they will mention in your appointment letter that you will be entitled for gratuity as per payment of gratuity act
2) Gratuity is Part of CTC but payable only after the completion of 5 years of service and eligibility should be 4 years 240 days.
From India, undefined
Dear Thakursumitmba,
Gratuity has to be paid to an employee if they complete 5 years of service with an organisation. It is not relevant if the gratuity is included in the CTC or not.
Click on the "+" sign for more helpful answers like these
Regards,
Sairam Bandi
From India, Bengaluru
Gratuity has to be paid to an employee if they complete 5 years of service with an organisation. It is not relevant if the gratuity is included in the CTC or not.
Click on the "+" sign for more helpful answers like these
Regards,
Sairam Bandi
From India, Bengaluru
For gratuity a minimum of service is 5 years and if 4 years and 240 days service completed it will be reckoned as 5 years.
From India, Tadepallegudem
From India, Tadepallegudem
Hello
CTC means Cost to Company. This cost can be monthly or yearly or once in five years .
The concept of CTC is not recognized by law but Gross pay and net pay is what is recognized by law .
As per the accounting principle every possible cost/expenses whether immediate or in future has to be recorded and accounted for by way of provision .
As per the Gratuity act the company has to take into account the gratuity from the day one of any employee joining the organization, and hence provision in the books of account of the caompany has to be made accordingly as gratuity might become a cost payable in future to employee if the employee chooses to stay back or dies during employment etc.
So when company makes such provision for gratuity for each employee in its books of account it ends up as cost to company for per employee it hires hence they add gratuity to CTC .
Hope this clears the doubt.
Regards
Octavious
From India, Mumbai
CTC means Cost to Company. This cost can be monthly or yearly or once in five years .
The concept of CTC is not recognized by law but Gross pay and net pay is what is recognized by law .
As per the accounting principle every possible cost/expenses whether immediate or in future has to be recorded and accounted for by way of provision .
As per the Gratuity act the company has to take into account the gratuity from the day one of any employee joining the organization, and hence provision in the books of account of the caompany has to be made accordingly as gratuity might become a cost payable in future to employee if the employee chooses to stay back or dies during employment etc.
So when company makes such provision for gratuity for each employee in its books of account it ends up as cost to company for per employee it hires hence they add gratuity to CTC .
Hope this clears the doubt.
Regards
Octavious
From India, Mumbai
I appreciate the rationale behind adding gratuity to CTC by Octavious. further, Gratuity is to be covered through Insurance which will be counted from day one. Thanks for detailed explanation.
From India, Hyderabad
From India, Hyderabad
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