Gratuity More Than 3.5 Lakhs

Maximum limit of Gratuity is 3.5 lakhs. Can the employer decide to give 24 months of basic salary of 75,000/- which works out to Rs.18 Lakhs.
Is there any restriction on Grutuity to only 3.5 lakhs.
If not what is the maximum limit which the employer can decide to pay.

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Regards
M. Peer Mohamed Sardhar
93831 93832

Dear Rajbal,
The Employer can give Gratuity more than rs. 3.50 lacs as provided in I.T. rules. But the income tax exemption upto Rs. 3.50 lacs.
regs,
Bhushan

Hi friends,
I would like to share with the following with regards to Payment of Gratuity Act....
The gratuity is payable to the employees who have rendered 5 or more years of continous services. Even an employee who has served 4 years & 240 days of the 5th year eligible for Gratuity.
The Calculation for Gratuity should be done in following method:-
Last drawn basic salary x 15 days/ 26 days x no. of years.
if you have an employee who has completed say 5years & 4 months
then instead of taking no. of years just put = 64 months/12 months.
Whatever is the figure is the Gratuity amount payable to the employee.
The ceiling amount laid by the Act is 3.5 lakhs.
The act clearly states that if there is better provisions of the Gratuity Act laid by the Company then that should prevail over the Act.
it means if an employee is eligible for more than 3.5 lakhs & Company has better policy to pay more than 3.5 lakhs then the Company can do so for the benefit of the employee.
Regards,
Anjali Tejani

Hi Anjali,
AS PER THE ACT, THE EMPLOYEE SHOULD COMPLETE 5 YEARS OF CONTINOUS SERVICES IN ONE COMPANY.
IF EMPLOYEE COMPLETES 4 YEARS AND 240 DAYS OR 4 YEARS 10 MONTHS AND RESIGNS, HE/SHE IS NOT ENTITLED FOR GRATUITY.
IF EMPLOYEE COMPLETES 5 YEARS 6 MONTHS, THEN IN THIS CASE HE/ SHE IS ENTITLED FOR GRATUITY OF 6 YEARS .
IF THE EMPLOYEES GRATUITY IS INCLUDED IN CTC ,THEN EVEN IF HE COMPLETES 6 MONTHS , 1 YEAR OR 4 YEARS AND 240 DAYS , THEN GRATUITY IS PAID FOR THAT COMPLETED PERIOD ONLY.
REGARDS,
NIMISH JOSHI
REGARDS,
NIMISH JOSHI

Hi Anjali / Nimish,
Those were good updates posted by you. But I am of the opinion that even if the amount is included in CTC it is not payable till such time a person completes 5 years of continuous service. Request more clarity on this.
Can anyone quote any of the provisions under the said act or any case law which says that continuos service of 4 years and 240 days makes you eligible for gratuity.

Hai,
When the statute is saying the maximum limit to give on the name of gratuity is 3.5 lacs, even though the actual calculation of gratuity is more than 3.5 lacs. The employer liability is upto 3.5 lacs only.
Maheswara Rao.CH
09848308694

Hi friends,
I got further update on this topic...
As mentioned earlier the ceiling amount laid by the Act is 3.5 lakhs.
The act clearly states that if there is better provisions of the Gratuity Act laid by the Company then that should prevail over the Act.
For an example if the employee is eligible for 4 lakhs gratuity amount, the employer's liability is 3.5 lakhs as per the act to pay the gratuity amount. However if employer has better provisions then the act and wants to pay 4 lakhs as gratuity, he can do the same.
Moreover the tax liability is not there on Gratuity upto 3.5 lakhs. The employee would require to pay taxes over 3.5 lakhs ceiling amount.
Regards,
Anjali

Dear Friend,
Kindly note that presently there is no upper limit for gratuity.
Regards
Subhabrata Dasgupta

Dear Anjali
Gratuity is not paid to employees who completed 4 years and 240 Days .
Just chek it it out. I may be wrong.
Regards,
Nimish Joshi
9969526325
02525-271113