Respected sir,
In a Metallurgical Company, the owner wants to adopt an insurance policy instead of a gratuity scheme. For insurance, he is going to bear 50% of the premium until maturity. The agent mentioned that from the first day, if anything happens to the workers (natural or accidental death), their family will receive Rs. 10 lakh/20 lakh. Another important point is that the maturity amount is more than 20 lakh, which is tax-free, while the maximum gratuity limit for the private sector is Rs. 20 lakh only.
In the gratuity scheme, in case of death, the gratuity will be as per the worker's service only.
What is your expert suggestion?
From India
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In a Metallurgical Company, the owner wants to adopt an insurance policy instead of a gratuity scheme. For insurance, he is going to bear 50% of the premium until maturity. The agent mentioned that from the first day, if anything happens to the workers (natural or accidental death), their family will receive Rs. 10 lakh/20 lakh. Another important point is that the maturity amount is more than 20 lakh, which is tax-free, while the maximum gratuity limit for the private sector is Rs. 20 lakh only.
In the gratuity scheme, in case of death, the gratuity will be as per the worker's service only.
What is your expert suggestion?
From India
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Respected sir,
In a Metallurgical Company, the owner wants to adopt an insurance policy instead of a gratuity scheme. For insurance, he is going to bear 50% of the premium until maturity (up to the retirement of the worker). The agent mentioned that from the first day, if anything happens to the worker (natural or accidental death), their family will receive Rs. 10 lakh / 20 lakh. Another important point is that the maturity amount is more than 20 lakh, which is tax-free, while the maximum gratuity limit for the private sector is Rs. 20 lakh only.
In the gratuity scheme, in the case of death, the gratuity will be as per the worker's service only. What is your expert suggestion?
Questions:
1) If the worker's death occurs before completing 5 years of service with a monthly salary of Rs. 65,000/-, the insurance company will pay Rs. 10 lakh, and Rs. 20 lakh in case of accidental death. What will be the gratuity amount?
2) The tax-free limit of gratuity for the private sector is Rs. 20 lakh only, while the insurance maturity amount, which is more than 20 lakh, is taxable.
From India
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In a Metallurgical Company, the owner wants to adopt an insurance policy instead of a gratuity scheme. For insurance, he is going to bear 50% of the premium until maturity (up to the retirement of the worker). The agent mentioned that from the first day, if anything happens to the worker (natural or accidental death), their family will receive Rs. 10 lakh / 20 lakh. Another important point is that the maturity amount is more than 20 lakh, which is tax-free, while the maximum gratuity limit for the private sector is Rs. 20 lakh only.
In the gratuity scheme, in the case of death, the gratuity will be as per the worker's service only. What is your expert suggestion?
Questions:
1) If the worker's death occurs before completing 5 years of service with a monthly salary of Rs. 65,000/-, the insurance company will pay Rs. 10 lakh, and Rs. 20 lakh in case of accidental death. What will be the gratuity amount?
2) The tax-free limit of gratuity for the private sector is Rs. 20 lakh only, while the insurance maturity amount, which is more than 20 lakh, is taxable.
From India
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Employer has to go by scheme as laid down by Payment of Gratuity Act. The provisions of IT need to be studied properly as payment of gratuity beyond 20 Lakhs will be taxable.
From India, Pune
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3251From India, Pune
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What is the Sum Assured for a worker/employee? Is it based on the salary drawn by him/her?
In the event of accidental or natural death, the employee will receive Rs. 20L/Rs. 10L respectively. However, what happens if the employee is alive after retirement? How much insurance amount will he get in place of gratuity?
Is there any criteria or calculation that confirms the salary for gratuity purposes at the time of retirement? What happens if he quits the job after 5 years of service? Why should the employee bear 50% of the premium when gratuity is available for free after 5 years of continuous service?
If your company is genuinely concerned with employee welfare, cover all your employees under "Term Life Insurance" with a minimum coverage of Rs. 10L. Group Term Life Insurance provides coverage to employees as long as they are employed by you. Consider implementing this policy where you can offer subsidized contributions and deduct a nominal amount from employees with their consent.
Regards,
Suresh
From India, Thane
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In the event of accidental or natural death, the employee will receive Rs. 20L/Rs. 10L respectively. However, what happens if the employee is alive after retirement? How much insurance amount will he get in place of gratuity?
Is there any criteria or calculation that confirms the salary for gratuity purposes at the time of retirement? What happens if he quits the job after 5 years of service? Why should the employee bear 50% of the premium when gratuity is available for free after 5 years of continuous service?
If your company is genuinely concerned with employee welfare, cover all your employees under "Term Life Insurance" with a minimum coverage of Rs. 10L. Group Term Life Insurance provides coverage to employees as long as they are employed by you. Consider implementing this policy where you can offer subsidized contributions and deduct a nominal amount from employees with their consent.
Regards,
Suresh
From India, Thane
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It is tricky, and I do not think it will work that way. The employees may not get it if they leave the company to work elsewhere even after putting in more than 5 years of service, which, under the Payment of Gratuity Act, has to be done. Maybe the employer is trying to mix things up, and the amount of the premium may be less as it is a group policy. It is better to have the Gratuity Act intact, and anything over and above may be accepted and not in lieu of it.
From India, Hyderabad
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From India, Hyderabad
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