Ten or more persons are employed or were employed on any day of the preceding 12 months is liable to pay gratuity to its employees. Once the Act becomes applicable, it continues even if the number of employees falls below ten.
Gratuity is payable to an employee (Nominee - in case of death of employee) who has rendered continuous service of five years or more on his termination of employment, superannuation, retirement or resignation.
Gratuity Tax Free limit has been raised from Rupees 3,50,000/= (w.e.f. 24-9-1997) to Rupees.10,00,000/= (w.e.f. 24-05-2010). Gratuity received by on death of employees by his widow or other legal heirs will be fully exempt if the employee is government employee for others same will be taxable subject to the provisions of section 10(10).
Employee has to make an application in Form-I to his employer within 30 days from the date of gratuity becomes payable.
No of Years Calculation:
Eligible for getting gratuity if employee complete 240 days service in 5th year with out any negative actions taken by management then the individual is eligible for the gratuity. (Refer Madras High Court Judgment)
Note:
For 4 Year 8 Months – 5 Year 7 Months = Take 5 Years Gratuity
For 5 Year 8 Months – 6 Year 6 Months = Take 6 Years Gratuity
Notice Period also is considered as a Service Only.
Service means Date of Joining to Date of leaving the Organization.
Date of joining means actual date of join not after completion of probation period
Is 240 days taken for eligibility without deducting leaves
Period of service as Apprentice shall not count towards service for the purpose of gratuity.
In the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks
In CTC: Usually while calculating CTC the gratuity amount is considered as 4.16 (30Days/Month) or 4.83% (26 days/Month) of Basic Pay.
Calculation:
Basic/26 x 15 days x Number of years of service
Basic + DA = Last Wage Drawn26 Days = Number Working Days in a month15 Days = Salary
Calculator: http://profit.ndtv.com/Calculators/gratuity.htm
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