Dear Professionals,
Can anyone share what is the Min/Max wage to be considered to cover an employee under Gratuity Act?
What is the Max Gratuity to be paid? as per the act, it says Maximum amount of gratuity payable to an employee shall not exceed 20 months wages. Is it amended in the Act or still applicable in all Companies...
I read max Gratuity is Rs.3,00,000/-, but have a doubt on it....
Can I seek your insights/experiences on it?

From India, Hyderabad
Hi kalpna/ Raju,
I would like to add something in 10 lakh. Rs .10 lakh Maximum limit for Gratuity is only purpose for Tax Calculation only. There is nothing in this section shall affect the of any employee to recieve better terms of Gratuity under any award or aggrement or cantract with the employer.
Purushottam Dass Matta

From India, Alwar
There is no minimum or maximum wage limit for an employee to be eligible for gartuity under the Gratuity Act. B.Saikumar HR & labour law advisor Mumbai
From India, Mumbai
Dear Sai Kumar,
Nice meeting you in CireHR.
Could you please clarify on Max Gratuity to be paid to an employee? is Max amt of Gratuity shall not exceed 20 moths wage?
Can I expect a right answer on the above?

From India, Hyderabad
Hi kalpana

Sub-sec.(3) of Section (4) stipulates a maximum limit for the gratuity amount to be paid to an eligible employee.Previously, the maximum limit was Rs.3.5 lakhs. In 2010, this sub-sectin was amended an dthe maximum limit has been enhanced to Rs.10 lakhs. It means if, by applying the gratuity formula, the amount of gratuity payable to an employee works to Rs.12 lakhs, he will be paid only 10 lakhs under the Act but not 12 lakhs. Gratuity is payable at the rate of 15 days wages last drawn for each completed year of service under the Act as under: Wages for this purpose in plain terms of the definition of wages u/Sec.2(s) can be Basic +DA.

Basic + DA/26 x 15 x no.of years of service.

The Act does not presecribe any formula for calculation of gratuity on the basis of the number of months.However, the Act will allow an organisation to frame a gratuity scheme with better terms. You must be having your own gratuiyty scheme with that kind of formula.

B.Saikumar

Mumbai

From India, Mumbai
Dear Sai Kumar.
I am very thankful to you for this. You have clarified my doubt with clear info with sections. I am doing PG Diploma in Labour Laws and Admin Laws, when I was reading the Act in University Book, got many doubts and found CiteHR is the best to get the right info in this.
Before questioning them/asking them of the syllabus (OLD), wanted to get my doubts clarified from right people who can speak as per the Amended Act.... Thank you so much for the info.

From India, Hyderabad
Dear Mr. Sai,
May be I am wrong, but there is no such limit for gratuity, yes the limit is 10Lacks, but its only to calculate Income Tax, upto Rs. 10Lacks, is exempted from I.T., after 10 Lacs it is Taxable Amount.
Please other senior also clear whether am I wrong.
Manish Bali
Manager _HR, Jindal Grp

From India, Delhi
Dear Manish
Sub-Sec.(3) of Sec.4 of the Payment of Gatuity Act reads as under ;
" The amount of gratuity payable to an employee shall not exceed ten lakh rupees.".
There is not a word more or a word less in the sub-section. Thus there is nothing in this sub-section to suggest that the ten lakh cap is only for income tax exemption purpose and that gartuity can be paid without any limit.However an organisation may frame it's own scheme with better terms where in there may not be such upper ceiling but limiting income tax exemption up to ten lakhs only..Probbaly you must be referring to such gartuity scheme.
B.Saikumar
HR & labour Law advisor
mumbai

From India, Mumbai
Say for example, if it exceeds 10 lacs, what is the percentage of income tax to be deducted. pls share
From India, Madras
Dear All,
10 Lakhs limit is,as far as income tax law is concerned.Company can pay more depending upon it's own gratuity policy.I know a company wherein gratuity is paid at the rate 15 days per year till 15 years of service thereafter at the rate of one month per year.I do not think there is any upper limit.
Have a nice day.
S.K.Deshpande.
Kandivali East,Mumbai.

From India, Bangalore

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