Gartuity Query - CiteHR
Pca
Service
Sethupathy
Sr.manager-hr
Srinathmreddy
Sr Manager
+1 Other

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I was employee of X company joined on 1st Sep 2005 and this company was taken over by Y company on 1st Feb 2009. With this take over it was continuation of service. I left company Y on jan 2012. Gratuity amount in X company was not part of CTC and gratuity act 1972 was being followed there. But in Y company gratuity amount was part of CTC. So my queries follows like this
a. How the gratuity amount will be calculated in this scenario ?
b. Will i get amount deducted by Y company separately and X company as per gratuity formula ( 1st sep 2005 - 1st feb 2009) ? or will it be just calculated based on number of years multiplied with gratuity formula.
c. I presume this amount is non taxable.

Dear Srinathmreddy,
a)Gratuity is the liability of the company whether they have mentioned in CTC or not.
Entered in CTC is for Books of account calculation, you need not worry about this.Please check your employment status as a continuous service in the company Y also.
b)Formula are the same. Please note no amount supposed to be deducted from your salary as Gratuity. CTC is cost to the company.
c) It is non taxable upto 10 lacs.

Legally no deduction can be made by the company from gross salary in salary sheet towards gratuity since it is statutory liability of the company only. If however, company has considered gratuity liability in CTC for internal working purpose, it will not in any way affect calculation of gratuity. Company Y will have to pay gratuity for full period as usual.
As regards exemption from tax, I may clarify that exemption upto Rs.10 lacs is not available to an employee in respect of each employer separately. This is the maximum exemption available for gratuity received from different employers taken together during his entire service period under different employers till retirement. Hence if an employee receives gratuity of Rs.10 lacs each from two employers separately during his entire service period, exemption available will be only Rs.10 lacs and balance Rs.10 lacs will be taxable.

Thanks setupathy.
Should i have to get both the amounts deducted from salary from company Y which was part of CTC and then based on gratuity formula for entire tenure ( company X + Y) or just Company X. Or will it just based on gratuity formula for entire tenure ( X + Y). This is confusion i am having.
By the way I got gratuity based of gratuity formula for entire tenure ( X + Y), is this right in my case or should i also have to get gratuity amount deducted as part of salary.
Continuing to my earlier query.
Suppose if A company is having Gratuity component as part of CTC and getting deducted monthly. When leaving company after 5 yrs of completion, will the pay gratuity amount as per Gratuity formula or they pay the accumulated monthly over 5 years.

I have joined my present company on 01.11.2007 and will complete my 4 years and 5 months service by 01.04.2012. I have 3 months notice period for sessation of employment as per my appointment letter. I am planning to put up my resignation by first week of April 2012 and will be working for 3 months notice period. Including my notice period i will have service period of 4 years 8 months with the company.
Is it compuIsory to complete 5 years service for gratuity eligibility? Am I eligible for Gratuity Benefit for working for 4 years 8 months?. The company has taken a Group Gratuity Scheme through LIC Of India.
Please send a quick reply.
Chandran.

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