Thread Started by #pankajkumarpujari

Now a day Companies were showing "Gratuity" as apart of CTC, to increase the CTC amount. And a fixed amount is deducted from employee’s salary every month as Gratuity provision. But that amount is not payable once any employees leave the organization before spending 5 yrs as per the Gratuity Act.
Upto how far this practice of showing & deducting Gratuity as part of CTC is correct?
And can that deposited amount of Gratuity can be paid to employees along with their F&F as taxable.
Need seniors Guidance & Suggestion.
27th April 2012 From India, Delhi
It all depends upon the company as CTC is a concept which is not defined in any government law. I have seen companies adding Group Medical insurance premium as CTC, this is never payable.
There is no deposited amount of Gratuity so again whether it should be paid if the employee leaves lest say in 4 years should depend upon the company policy.
Ranjit
CRM Softwares | HR Softwares
27th April 2012 From India, Delhi
Gratuity (@4.81% of Basic + DA) can be shown as a part of CTC calculations since the Employer is usually contributing to the Gratuity Fund/ paying premium to LIC to to cover their liability towards Gratuity which is payable, as per "Payment of Gratuity Act, 1972", if an employee completes 5 years service. However if the Employee leaves before 5 years, Gratuity is not payable. There is no question of deducting Gratuity amount shown in CTC as it was never payable in the first place.
To be clear to the the new recruits, it is advisable to show Gratuity under "Perks available in long run" separately from the "Gross Monthly Salary". Also besides the CTC (which could includes Gratuity), the "Carry home" salary which is the "Gross Monthly Salary" less deductions (e.g. PF, ESI) should be shown so that there is no misunderstanding that Gratuity is being deducted monthly etc.
30th April 2012 From India, Jaipur
Mr. Rajiv has clearly said. Gratuity is not part of the gross salary.
But there is a provision where the company starts accumulating the amount after the employee completes the continuous service of 1.6 year in the company, but it will be paid only after completion 5 continuous working years in the same company. So they may probably have mentioned the amount which is going towards your gratuity account, but it's not deducted from your pay!! it's the contribution made by the company. Purpose of gratuity pay is to show the gratitude towards the employee for his continuous loyal service....(So how can an employee, I, myself show the gratitude towards myself??)
30th April 2012 From India, Bangalore
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