I Need Help Gratuity-Reg

Hi
iam working as a HR executive
one of my employee resigned,we have a group gratuity
i submited all the information regarding to him to LIC Office
they sent one DD some amount ,
which it is caliculated on total gross Salary not on basic salary
please help me
Thanks & Regards
ravikumar

Hi,
Please check the definition of 'wages' in Payment of gratuity Act. Gratuity is payable on Basic and also dearness allowance.
Cyril

Hi,
Gratuity, as pe the provisions of the Payment of Gratuity Act and rules made thereunder, is calculated on basic wages and da and not on gross wages. As per section 2(s) of the Act "wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of employment and which are paid or are payable to him in cash nd includes dearness allownace but does not include any bonus,commission,house rent allowance,overtime wages and any other allowance. No upper limit to salary has been prescribed in the Act.
As far as income tax on gratuity payments made to employees is concerned, any payment in excess of Rs.3,50,000 would attract tax at source at applicable rates.
Regards,
K.S.Venkatachalam

Mr.venkat
did u understand my question
I know gratuity is caliculated on basic + DA
but here the DD what i received from LIC Office
which is caliculated on Gross Salary .
so what should i do now? Can i send back the DD to LIC office for correction?
please tell me

Dear Ravi,
Check the Gratuity policy that you have taken with LIC for the no. of days taken as part of calculation, also verify the data that you have sent to LIC. Then contact the concerned LIC office and verify the amount with them. In case of any mistake on their account they will surely take the cheque back, and issue a new one. Only thing LIC takes a bit longer to reissue the cheque.

In view of the provisions of the Payment of Gratuity Act, you may have to return the cheque to LIC and ask them to recalculate the gratuity. However, before doing that, I suggest you go through the LIC's master policy, a copy would have been handed over to you at the time of formation of the trust, whether your company had agreed to pay
gratuity on CTC. I have seen few policies where companies have gone beyond what is prescribed in the Act. For example, few companies have agreed to pay gratuity @ 30 days for every completed year of service, instead of 15 days, to employees who have rendered 10 or more years of service with the organisation. In such cases, Income tax will be calculated, as per the provisions of Gratuity Act, and the balance amount would attract tax as per applicable rates.
If you still need clarification, you may send a mail to [Login to view]
Regards,
K.S.Venkatachalam

Gratuity is payable on basic only....but in certain organisation gives the benefit to employees that amt is calculated on the gross salary......though as per rules Maximum amt of Non Taxable Gratuity is Rs. 3.5 Lacs but certain organisation pay more...which attracts tax....pls check the policy and speak to the LIC about the basis of working......and take feedback from them . have a meeting with them and discuss things in details....

The definition of wages, as we know, varies from statute to statute. Wages has been defined in the Payment og Gratuity Act, 1972 under section 2(s) stating in crystal clear terms that it includes dearness allowance. Our friends Venkat and Cyrill have already mentioned the same earlier. Therefore, it can no more be a matter of opinion whether it comprises only basic pay or includes D.A. I think the section is quite self explanatory on this aspect.
ashok