Soumik1570
Calcutta University
TIKARAM CHAUDHARY
Gratuity Fund Formation Consultant
Korgaonkar K A
Ba,llb,mpm,dir&pm,dll&lw,d.cyber
K C S Kutty
Labour Laws
+3 Others

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Dear Seniors
I have a query.
Is the gratuity amount which is paid after a completion of 5 years to a employee, is deducted from the ctc of the employee to make provision for payment of gratuity?
In my case, my employer has deducted certain amount towards gratuity from my ctc for the past 4 years and four months.
Is it right or wrong? If it is wrong, then how would I be able to claim it?
Kindly reply
Nayana
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Hi Nayana,
Please be understand that Gratuity is not deducted from YOUR CTC. The term CTC is no longer related to the employee. Hope, you aware, CTC is the "Cost to the Company". Hence, the owner for the term "CTC" is the Employer.
Employer is using the term called "CTC" wanted to know the total cost involved for engaging a employee in a particular designation or role. Hence, to understand the total cost involved, they can add, whatever the cost they are spending from the packet for the particular designation.
Hence, your employer is showing the cost in the heading of Gratuity in the CTC.
In case, you are completing 5 years of service, then the cost will be given to you.
Regards,
SDK
Dear Nayana ji,
CTC is a Cost to the company on your employment. The cost towards your gratuity is incurred by the company since your joining. Company needs to make the provision for your gratuity from first year itself of your service. Therefore company consider this cost from beginning itself. There is no wrong. Mind well, as SDK said that the CTC is not your Salary. CTC is the concept you accept at the time of negotiating your salary.
However I suggest employers to write a foot note below the CTC structure stating that gratuity is payable to employee on completion of 5 years service as per POG Act. So that employee gets clarity at the time of joining itself.
Dear Nayna
Rightly said by other members, CTC is "cost incurred by a company towards engaging /retaining an employee". Different companies have different components. CTC may include all monetary and non monetary expenses and investments that a company makes on an employee.
In your case..it is necessary for you to understand that it is only notional deduction (if it is shown in pay slip). It could be explained as that your company invests that much amount on monthly basis towards your Gratuity, which company is liable to pay when you become eligible.
Only apprehension or catch is what if an employee leaves before completion of Five years of service? Regards
Shailesh Parikh
Vadidara, Gujarat
99 98 97 10 65
But we have to all mind it that 5 years of service is not required when the employee got dead or permenent disbalement from the service due to accident or dicease.
Pl clarify whether any deduction is made from your Monthly Salary towards contribution to Gratuity ? If so what is the amount deducted per month as per your Pay Slip ? K C S Kutty
companies do deduct it from ctc, but this is not right approach, or a good company hr approach.

Please refer to payment of wages act, and first see what is deductions called, and the legality of deducting any sum from the salary, it's maximum percentage, and if under coperatives then how much..this will give you a basic idea...

Now deductions are accumulated for the fund, which must be registered fund, but as such gp fund is no such funds where the deductions can be stored, its not legal.

And you dont have to think rocket science, just imagine, how can an employer ascertain what will be your last pay's basic+Da, on which the gratuity sums would be deducted. and funny things is , suppose your gratuity is less than 10lkhs, and you dont have to pay the taxes, thats what statues say, but see if by adding such monthly gratuity amount to CTC, you somehow fall under taxable income, then you will have to pay tax each year , till you resign and finally get the gratuity..and the employer will seek tax relief by showing different heads of such unlawful deductions..thats exploitation of employees.
With reference to Gratuity, I have a caution. See that collected amount is deposited by getting a number. In case it is not done, during the period of service and death of the candidate, the family would be deprived from FP family pension.
What is the relationship between GRATUITY and FP family Pension ?
What is the relationship between Gratuity and FP family pension ? In the above post it is mentioned as under.
"With reference to Gratuity, I have a caution. See that collected amount is deposited by getting a number. In case it is not done, during the period of service and death of the candidate, the family would be deprived from FP family pension"
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