General Manager - Hr
Officer Hr At Western Refrigeration Pvt.
Rahul Vinayak Wagh
Kindly go through Section 4 of the Payment of Gratuity Act,1972 which define terms of payment of gratuity: -
Section 4. Payment of Gratuity.-
(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-
(a) on his superannuation, or
(b) on his retirement or resignation,
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to
death or disablement:
1[Provided further that in case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his
heirs, and where any such nominees or heirs is minor, the share of such minor, shall be deposited with the Controlling Authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority].
Explanation.- For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of
performing before the accident or disease resulting in such disablement.
14th August 2013 From India, Jaipur
As per section 4(2), you have to pay gratuity for 7 years service only which are completed years of service. This section says:
"(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the wages last drawn by the employee concerned";
V K Gupta.
15th August 2013 From India, Panipat
I appreciate the contents of Mr Surendra. Only thing I would like to add is that, now-a-days, some companies have tied up with Insurance providers like LIC, ICICI or any other, who reimburse the payment of gratuity paid to the nominees of employees after death. In such cases, employers have adopted some formula to pay gratuity for the period of service rendered as well as gratuity for the remaining period of service lost due to death. The whole amount in such cases is reimbursed by the Insurance providers who charge some premium every year for such insurance of gratuity cover. You have not mentioned what is the practice in your organization. If no such arrangement has been made, gratuity shall be paid only for the period of rendered service as per provisions of PG Act.
15th August 2013 From India, Jabalpur
His gratuity will be calculated for 10 served year or upto his retirement age i.e. 58 Yr.
I think gratuity upto 5Lacs is non taxable. Suppose gratuity amount for an employee comes more than 5 Lacs will the tax will be attracted on excess amount even he is expired.
Is there any relaxation in death cases.
16th August 2013 From India, Jaipur
yes, we have tie up with LIC for gratuity bt we have entered into contract with LIC on 1/4/13 and unfortunately employee died on the 31/03/2013. so for LIC it should not covered, we have to pay him gratuity from our side.
that why this question raised in my mind.
16th August 2013 From India, Vadodara
i appreciate your effort, as you quoted i go through the section 4 of Act bt sec. 4 again not serve my purpose.
i need more clarification on this.
whether employer has to pay gratuity for remaining years of services or not???
16th August 2013 From India, Vadodara
As per my assumption employee has died on account of employment injury.Otherwise he would have continued in your organization.Though we can't assume how long he will continue his service till retirement if he is loyal to the organization my opinion we have to consider just like workman compensation which it renders the compensation covers till his retirement age in terms of loss of capacity as the early period during his employment.Any how if your management do so there may be little comfort to the bereaved family as the head of family missed in their life.
16th August 2013 From India, Secunderabad
Your quries have been answered in the foregoing threads:
1 gratuity period calculation in case of death: Period of Service rendered. If you have LIC policy, then as per policy.
2 taxable gratuity amount is still to be replied : See Section 10(10)(ii) of the Income Tax Act or consult your CA.
V K Gupta
16th August 2013 From India, Panipat
In such case that your organization has tied up with LIC on a later date, the deceased will be entitled for gratuity for the period of rendered service only. Many followers have mentioned the limit of gratuity as 3.5 lakhs or non-taxable upto 5 lakhs. But Sirs, the gratuity limit has been raised to Rs.10 Lakhs as of now. It is fully non-taxable.
Best wishes to all
16th August 2013 From India, Jabalpur
as you mentioned, we have already done it that through our employee contribution scheme and again i personally think if i have to give gratuity amount for the remaining years of services also thn it would be more comfort for his family. bt for that i need some written docs which help me to put my effort to managemnt.
thts why i m wondering for that .
17th August 2013 From India, Vadodara
i would like to reveal you everyone that i had gone through the Act and consulted to one of consultant and finally i got the answer that organisations are liable to pay gratuity for the completed years of services only. and i have done it as per the act
i would thankful to everyone for giving their valuable suggestion for above query.
i look forward from this forum to resolve any kind of queries.
Thanks again to everyone.
22nd August 2013 From India, Vadodara