Psdhingra
Legal Analyst, Hrm
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Anesh N
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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.
Regards
Sumit

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

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

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

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.
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

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.
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
Regards_Anesh
Manager HR

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.
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.
Thanks,

From United Arab Emirates, Dubai

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