Dear Friends,
I am in the process of completing full and final settlement of one of the senior person in the organization.
My query is what is the maximum amount one can pay under grautiy act, 1972.
If possible pl send your replies with documents which supports the claim.
I thank you all for spending your valuable time in advance.

From India, New Delhi
Dear Kikurai,
While the maximum amount of gratuity is Rs.10 lakh, it may be noted that the amount is for the whole service period. Hence, if you have any document to prove that the employee had already got some gratuity from his previous employer/s, you may consider the maximum amount of Rs.10 lakh including the previous amount of gratuity and the balance is only payable. However, as Mr. Negi, suggested the employer may grant any amount exceeding the limit under the Payment of Gratuity Act.

From India, Mumbai
No .Gratuity is not an amount by all the employers together It is the legal responsibility of all the individual employers to pay gratuity to his employees who completes 5 yrs service.The amount of gratuity received by an employee from his previous employer is not counted for maximum limit of Rs 10 lakhs.Any understanding contrary to this is not correct.
Varghese Mathew

From India, Thiruvananthapuram
@ Premkumar Nair
your input that the maximum gratuity amount of Rs.10 lakh is for the whole service period is absolutely wrong. I do not understand on what basis you have given such input. What you have stated is against the Payment of Gratuity Act.
I totally agree with Mr Varghese mathew
Kamal P

From India, Pune
Dear All,
Thank you very much for the responses.
However i still have one query. According to the response the maximum limit is 10L. In case of somebody the gratuity amount is calculated as 25 lakhs, in that case should we pay only 10 lakhs or 25 lakhs, in that case upto 10 lakh is exempted from taxation and the remaining amount of 15 lakh is taxed as per the tax bracket.
pl let me know.

From India, New Delhi
Hi Kikurai,
As per the Gratuity Act,1972, there is no Limit on the Gratuity Payment. Maximum Rs.10 Lakhs is the exempted amount for Gratuity payment & more than Rs.10 Lakh it will be treated as Taxable component along with the regular component.
Even though if is more than 25 lakhs, only Rs.10 Lakh will be treated as Exempted amount & balance Rs.15 Lakh will be treated as Taxable Component.

Dear Kalaiselvan,
That means we can pay Gratuity more than 10 lakhs, irrespective of taxation issues. Or is there any law, which says you can not pay gratuity more than 10 lakhs.
Pl let me know.
Kind regards,
Kiran Rai

From India, New Delhi
Hi Kiran, Yes, we can pay the Gratuity amount for more than 10 lakhs & there is no law for not paying the Gratuity amount for more than 10 Lakhs. Kalaiselvan.M

Section 4(5) of the Payment of Gratuity Act stipulates that the gratuity eligible as per rules can be granted eventhough it exceeds the ceiling limit of Rs.10 lakhs.If the employer had an agreement with financial institutions like Life Insurance corporation of India for the Payment of gratuity to employees,the employee can receive the gratuity as per his eligibility and the LIC will grant the amount exceeding the ceiling limit.
From India, Chennai
When you pay Gratuity more than 10 lacks, you should deduct TDS as per his/her Tax bracket, it is important otherwise
employer will not get benefit as expenditure for more than 10 lacks payment.
Pramod Thakar

From India, Pune

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