Legal Analyst, Hrm
Sr Hr Professional
Private Consultant On Labour Laws
Anesh N
Manager Hr
Hr Manager
+3 Others

Dear all,
i have one query related gratuity:
1. Employee retired at the age of 58 years.
2. He completed 4 years of service in pvt ltd company.
3. if he is entitled, then it would be taxable or non taxable.
Reply and Suggestion please.
7th November 2016 From India, Gurgaon
Sorry but that is allowed only in case of death or disablement. In case of superannuation 5 years are mandatory. But see this to know you are eligible or not Indian Labour Laws & Shram Suvidha Simplified

7th November 2016 From India, Kolkata
Dear Sumit,
Section 4 of the Payment of Gratuity Act,1972 provides that gratuity shall be payable to an employee on his superannuation, on his retirement or resignation after completion of continuous service for not less than five years.
Since the employee has not completed mandatory period of FIVE years on retirement, he shall not be entitled for the payment of gratuity under the Act.
BS Kalsi,
Member since August, 2011
7th November 2016 From India, Mumbai
All suggestions are correct. But, from my side a small suggest for eligibility of gratuity. If an employee completes his 5 years service without any absences or any break in service is automatically considerable for gratuity. However, if he is not completed 5 years service; suppose an employee completes 4 yrs and 10 months service what would happen? As per IDAct if any employee completed 240 working days in a year he is eligible to get all employment benefits as per law. Such a case employee who completed 4 yrs + 240 wrkg days service is eligible to get gratuity.
In line with the tax on gratuity is not applicable. Trust clarifies the query
8th November 2016 From United Arab Emirates, Dubai
240 days is for orgs working 6 days a week; those working 5 days a week it is 190 days. Check definition of continuous service.
9th November 2016 From India, Mumbai
Dear Prathap,
There is no doubt that your contention is correct for the cases where an employee has completed 4 years and 10 months. The Madras High Court has also favoured your contention but sorry to say that the instant employee has completed only FOUR years as mentioned by Sh Sumit in his post.
BS Kalsi,
Member since August, 2011
9th November 2016 From India, Mumbai
When not eligible for gratuity on merely of 4 years of service, where the question of income tax arises? Even if eligible after qualifying service that is exempt from income tax.
10th November 2016 From India, Delhi
Hi Sumit,
If the employee have completed 4 yrs & 8 months of continuous service & at the time of retirement age then he or she is applicable to get gratuity under the act, if not completed as per said period then he or she will not be able to claim. No tax is liable for gratuity claims
Manager HR
10th November 2016 From India, Kollam
As mentioned that the Employee retired at the age of 58 years on superannuation and served for 4 years. It is clear to the management that the individual will be due for retirement after 4 years and will not eligible for the Gratuity payment since the same falls due on completion of 5 years service. If the gratuity subscription (4.81%) of Basic was shown as part of CTC then the amount can be paid because it was well known in advance that the individual will not be eligible for the gratuity on his retirement, if it was not part of CTC, then no need to pay.
11th November 2016 From India, Bahadurgarh
Hi Kalsi,
I understand the content of query raised by Mr Sumit. I appreciate your valuable advise in this regard. Meanwhile, Mr Sumit has queried that the employee completed his 4 years of service while retirement. But, there is no specific duration of service communicated. Hence, explained both conditions of eligibility.
11th November 2016 From United Arab Emirates, Dubai
Hi Srikanth,
How do you calculated 190 days in a year even 5 working days in a week? Check it would come 260 days in year. Moreover, the query is also not fair; because as per company / organization policy week end saturday and sunday are weekly-off with payment. It could be considered part and parcel of working day (this can be considered in case of salary based employees). In case of wage based blue collar employee he must have exactly 240 paid working days. So, Continuous of service means without any absent, loss of pay or any kind of unpaid services are considered continuous in service.
11th November 2016 From United Arab Emirates, Dubai
Calculation of Layoff latest rules can be post any one please?
27th January 2017 From India, Delhi
Dear BSR Rao,
Section 25-C of the Industrial Disputes Act, 1947 provides that a workmen (other than a badli or casual workman) shall be paid lay off Compensation by the employer for all days during which he is so laid off, except for such weekly holidays as may intervene, compensation which shall be equal to 50% of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid off.
BS Kalsi,
Member Since August, 2011
28th January 2017 From India, Mumbai
Prathap Kodaganti Have your read definition of 'continuous service' under the act? Please read and then put forth your point, if any.
28th January 2017 From India, Mumbai
Prathap Kodaganti,
I agree with Sh Shrikant that instead of quoting the ID Act for calculation of 240 days, you should have read the definition of "Continuous service" given under Section 2A of the Payment of Gratuity Act, 1972 itself.
I have confined my reply to the query initially raised by Sh Sumit but you have given another twist to the ongoing thread mentioning that what would happen if an employee completes 4 yrs and 10 months service. In such cases we mostly refer to the judgement of Madras High Court which has allowed the relief to such employees.
BS Kalsi,
Member since August, 2011
29th January 2017 From India, Mumbai
Prathap Kodaganti, A copy of the Madras High Court is attached herewith for your ready reference. BS Kalsi, Member since August, 2011
4th February 2017 From India, Mumbai

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File Type: pdf Madras High Court Juggement on Gratuity.pdf (1.46 MB, 77 views)

Dear Friend,
Any case citation is case specific and can not over ride the law in force. The law will continue as long as law it is not get ammended. The contineous service of 240 days and tenure of one year service are two different aspect. And to be understood in line of law framed keeping those two things in eye.
28th August 2019 From India, Mumbai
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