Madhu.T.K
Industrial Relations And Labour Laws
+2 Others

Cite.Co is a repository of information and resources created by industry seniors and experts sharing their real world insights. Join Network
If the Gratuity is part of CTC, will the employee eligible to receive the amount at the time of retirement /resignation amount as per the gratuity act and also amount which is part of CTC also ( Both the Amounts)
Gratuity payable at the time of leaving the company after serving the minimum qualifying period is certainly a cost to company. The only problem is that if it is shown as a deduction from salary then only the same will be available to the employee on leaving the company as a right. On the other hand if it is outside the Gross Salary like employer's contribution to PF then you cannot claim it as a fund deducted from your salary. In such scenario the amount shown will not be available to you on your leaving but the actual gratuity based on your last drawn salary and years of service will only be available to you.
Gratuity Rules in India are very clear. It states that every employee is eligible to get a gratuity (lump sum amount) at the time of leaving the job. This Amount is given on the basis of a formula. According to the gratuity act, every employer, who has 10 or more employees, has to follow the gratuity law. This law is applicable to government and private sector both. The government also give tax exemption on the gratuity payment.
Every employer is bound to give a gratuity amount to its employees if it employs more than 10 people. But you would get the gratuity only after completing at least 5 years in the service.
Gratuity Calculation Formula
Gratuity in India is calculated using the formula:
Gratuity = Last Drawn Salary × 15/26 × No. of Years of Service

Thanks for your response , my case i received gratuity amount as per act , whereas employer added gratuity in my CTC as my Gross Earnings 4.81% from my basic pay every year , will i eligible to receive that amount also .Kindly clarify
Dear Ajit,
Madhu TK Sir has hit the nail on the head.
The employer may add Gratuity to your CTC. In fact employer can add many other things to the CTC because it is just a cost metrics for the employer.
However, the key here is whether the gratuity component has been deducted from your gross? Is it part of your GROSS? if it is, then you can claim it as your right other wise it will be as per provisions of Payment of Gratuity Act.

what is the maximum limit of Gr. amount and on that any income tax will attract as working in PSUs
Please Login To Add Reply






About Us Advertise Contact Us
Privacy Policy Disclaimer Terms Of Service



All rights reserved @ 2020 Cite.Co™