Gratuity - Gratuity Limit [Thread 221649]

Rspected Seniors
Wish you all a very Happy & Prosperous New Year!
Initially the maximum amt of gratuity payable to an employee was Rs. 3,50,000/-. Has this limit been increased & if so the details may be provided, please.
Regards
Animesh Sarkar

Dear Animesh,
It is still Rs.3.5 lacs.
With Regards,
R.N.Khola
QUOTE=animesh2001;996097]Rspected Seniors
Wish you all a very Happy & Prosperous New Year!
Initially the maximum amt of gratuity payable to an employee was Rs. 3,50,000/-. Has this limit been increased & if so the details may be provided, please.
Regards
Animesh Sarkar[/QUOTE]

Hi Animesh
The Gratuity maximum limit is still 3.5 laksh, not yet increased.
The Recommendations are are made to the Finance Ministry for a limit of 10 lakhs, it has to be submitted to parliament and rajyasabha for enactment.
Mohan Rao
Manager HR

Dear Al,
In my opinion, the gratuity act does not specify the limit of Rs.3,50,000/-. It just gives the formula on which gratuity has to be calculated.
The limit has been prescribed in the income tax act.
Further, even the income tax act does not state that we cannot pay gratuity in excess of Rs.3,50,000/-.
Rs.3,50,000/- is the amount that would be exempted from tax and the excess if any would be taxable in the hands of the receipient.
Kindly correct if my opinion is incorrect.

Hi,
Mr.Rao is correct that recommendations are made to the Finance Ministry up to Rs.10 lacs for Gratuity.
Currently it is Rs.3.5 lacs which is minimum limit for Gratuity.
Regards,
Pushpendra

well to my knowledge gratuity act does specify d gratuity limit of 3.5 lacs,however an employer can pay more dan dat..if he intend to...n as per income tax act gratuity wnt b taxable upto 3.5 lacs..but beyond dat n employer will hav to pay tax on d excess amt...
seniors pl correct me if m wrg...

Hi,
the matter to increase the limit of the gratuity is under consideration and would be possible to increase at 10 lac in coming year.

Hi,
The maximum limit for the payment of gratuity is Rs. 3,50,000/- on the completion of 5 years of service and proposal to increase the limit upto Rs. 10,0000/- was made in the 6th pay commision and the matter was put to discussion in parliament of india i.e in upper house(Rajya Sabha)
wishing u all a prosperous 2101,
thanks & regards
from,
sumit kumar saxena,
9899669071, 0120-4131277

Dear All,

I wish you all a very very hapyy New Year 2010.

The Payment of Gratuity Act, 1972, applies to factories and other establishments employing 10 or more persons. On completion of five years service, the employees are entitled to payment of gratuity at the rate of 15-day wages for every completed year of service or part of it in excess of six months subject to a maximum of Rs 3.5 lakh. Till date no amendment has been made to the existing provisions of the Act.

Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, on the following three comditions

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease : Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement

The Claculation is done on ( Basic/26)*15*(Total number of years worked, more than 5)

The gratuity is considered an income and the employee who receives it is liable to pay taxes on it. However, gratuity up to Rs 3.5 lakh is exempt from tax under the provisions of Section 10(10) of the Income Tax Act, 1961.

Regards

Nirmal

__________________

Dear Gopal,
Mr. Nirmal have already provided the details on calculation of gratuity on this thread itself.For more further clarification you can also go through section 4 of the Payment of Gratuity act, 1972.For consideration of wages plz go through section2(s) of this Act.
With Regards,
R.N.Khola