JudeGRDear Shivam, 10 - 20L implies a gratuity payout that does not exceed 20L after exit/retirement. No impact to visualize otherwise.
From India, Chennai
Thank you for sharing your thoughts. Could you be little more elaborative.
Earlier it was 10 lacs and now it is 20 lacs.
Is that means:
a) Taxable gratuity was after 10 lacs and now 'No Tax Till 20 lacs'
b) If the employee can receive beyond 10lacs as gratuity, how the private company will increase their gratuity fund. As currently in private industry, 4.81% of basic has been deducted from employee salary. Will it lead to more deduction from employee.
Please share you thoughts.
From India, Bengaluru
One need not emphasize the solace provided by the triple terminal benefits viz., Provident Fund, Pension and Gratuity to the working classes in the organized sector when they become obsolete and infirm with the advancement of inevitable aging process. Particularly, in the absence of equitable social security measures to all citizens by the Welfare State, such post retiral benefits to the working class who contributed to the economy of the society when they are productive and eventually become no more productive with the advancement of age is more based on the doctrine of egalitarianism rather than profits and losses of enterprises.In this back drop let me answer your queries as follows:
There is not any change in the scenario of the rate of contribution to the Gratuity Fund in the Industrial Sector or the financial commitment of the Governments in respect of their employees.
a)By the hike in the existing ceiling to Rs.20 lakh, the employees stand to get more without income tax deductions and though the employer has to pay more it is actually covered by the Insurance taken by them u/s 4-A of the Payment of Gratuity Act,1972. Therefore, it does not cause any additional financial burden to them. With the implementation of the Seventh Pay Commission Recommendations regarding the Central Govt Employees, the gratuity ceiling has already been raised to Rs.20 lakh and it has been invariably followed by all the State Governments. Thus this amendment brings in harmony in respect of Govt. Service and industrial employment.
b) In my opinion the loyalty of the employees to their establishment will increase and reduce employee turn over as all paid employees are eligible for gratuity. So far as employers are concerned, all would tend to subscribe more to Gratuity Insurance Scheme.
c) I don't think that it will cause any impact on the salary of the employees as there is no change in the existing rate of calculation of gratuity, the particular portion of the CTC remains the same and the impact is to be absorbed by the Insurer only.
d) Only the concession on the maximum amount of gratuity actually payable available to the employer is reduced by this amendment. I am, therefore, of the view that no additional effort is required on the part of the employer.
From India, Salem
b) No change in anything. 20L shall be achieved based on the last drawn basic and number of years in service.
More the basic, more the number of years in service = more the gratuity.
4.81% on basic stands till further notice
From India, Chennai
nathrao#) In Private sector practice is: 4.81% of basic from employee CTC is contributed to Gratuity Fund.
This is just for working out their liability towards gratuity and does not impact employee anyway.
a) What implication it will have on employer and employee
This will be good for employee.
b) Will this impact employee 'Salary'? If yes, how it will?
No impact on salary.
Gratuity is paid on separation or retirment as per laid down rules
c) If there is any liability on company, what and how it will impact?
Company will have to bear the increased load of gratuity and according join group gratuity schemes.
d) To cope up with the revision in Gratuity ceiling, what provisions employer should be doing?
Take suitable insurance policy to cope with higher outlay on a/c of gratuity.
The govt must be congratulated on pro employee decisions which goes a long way to ensure financial stability at time of retirement.
From India, Pune
Suresh RathiThere is provision of taking insurance to pay gratuity, which may be explored.That ensures that employees get their due and employer get covered from sudden cash outflows. It will also cover, gratuity to be paid to employees who die in harness.
Col. Suresh Rathi
From India, Delhi
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