Understanding Gratuity Limits: Is Rs. 3.50 Lakhs the Max Payable or Tax Exempt?

Dear All,

I have the following query/confusion regarding provisions/practices under "The Payment of Gratuity Act, 1972". Is the ceiling of Rs. 3.50 lakhs towards the maximum gratuity payable under the Payment of Gratuity Act or the maximum amount exempted under the Income Tax Act?

Regards,
Gaurang Sheth

Dear Mr. Gaurang,

The amount of Rs. 3.50 lakhs is the maximum eligibility for Gratuity as per the Gratuity Act.

Regards,
Santosh Iyer

Hello, Mr. Iyer,

Thank you for your reply to my query. Does this mean that if at the time of resigning or retiring, 15 days of salary multiplied by the number of years of service is more than 3.50 lakhs, legally, the employee cannot claim gratuity above 3.50 lakhs?

Regards,
Gaurang Sheth

Sir,

Please provide me with the revised notification for the increase in the payment of Gratuity from 3.5 to 10.00 lac, if any.

Dear,

The maximum gratuity limit is still Rs. 3.5 lacs. The matter is under process.

With Regards,
R.N.Khola

Basic Information Required for Gratuity Settlement

1. What is the basic information required for the settlement of gratuity under the Payment of Gratuity Act, 1972?

Increment Details for Long-term Employees

2. For an employee who has worked in any organization for 20 years or more, is it compulsory to check all increment details, i.e., annual increment/salary fixation, which are recorded in the service book at the time of payment of gratuity due to retirement/resignation/death?

Recovery of Excess Employer Contribution

3. If any amount has been contributed in excess towards the employer's share in the PF account due to wrong salary fixation/increment or any other reason, can this employer contribution amount be recoverable from the payable gratuity to the employee due to retirement/resignation/death?

Regards,
Arun Saxena, M/s Nav Bharat, Delhi, [Phone Number Removed For Privacy Reasons]

Gratuity is payable if an employee has completed continuous service of 5 years as per Section 2A of the Gratuity Act 1972.

Gratuity Calculation

For the calculation of gratuity, the present salary is taken into consideration using the following formula:
Monthly salary * 15 * Number of years of continuous service / 26

Thank you.

Dear Sir, I have not received an answer to my third question. Kindly review my third question again. My query is as follows:

1. Is any amount that has been contributed in excess towards the employer's share in the PF account, due to wrong salary fixation/increment or any other reason, recoverable from the payable gratuity to the employee upon retirement/resignation/death?

Regards,
Arun Saxena
M/s Nav Bharat
Delhi, [Phone Number Removed For Privacy Reasons]

If the gratuity limit is increased from 3.5 lakh to 10 lakh, could you please share the notification for the same?

Regards,
Anand

Please find attached herewith the required notification.

R.N.KHOLA (LL&IR) Welcome Skylark Associates