Can gratuity be paid with monthly salary, right from the day employee has joined the Company?

Can gratuity be paid with monthly salary, right from the day employee has joined the Company? Can it be a part of monthly compensation? Is it right not to maintain any gratuity fund?

Had the poster made any effort to understand the concept and the purpose of gratuity to employees as well as the objective, scheme and mandatory requirements of the Payment of Gratuity Act, 1972, I think, this question would not have arisen. Gratuity is a terminal benefit for a long, blemishless and continuous service in the same establishment. It becomes payable only on the termination of employment as a lumpsum one-time payment.
Forming a gratuity fund is optional. But taking an isurance for gratuity is mandatory.

What purpose does it serve if it is paid with the salary on monthly basis?

It will not serve any purpose dear friend. It is clearly stated by learned senior Mr.Umakanthan and it is a terminal benefit only.

Gratuity is a benefit received by an employee for services rendered to an organisation. For companies covered under the Gratuity Act, this benefit is paid when an employee completes five or more years of service with the employer. An employee gets gratuity when he/she resigns, retires or is laid off. In case of death or disablement there is no minimum eligibility period.
How Gratuity is Calculated
The gratuity amount depends upon the tenure of service and last drawn salary. It is calculated according to this formula: Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26.
According to this formula, the time period of over six months or more is considered as one year.
This means if you have completed five years and seven months of service, the number of years would be considered as six years for calculation of gratuity benefit.
On the other hand, if the service period is five years and five months, for gratuity calculation it will be considered five years.
An employer can, however, give higher gratuity than the amount under the prescribed formula.
Maximum Amount
For government employees, Rs. 20 lakh is the maximum amount that can be paid as gratuity. The Seventh Pay Commission had recommended an increase in the gratuity ceiling to Rs. 20 lakh from the earlier level of Rs. 10 lakh.
Income Tax Treatment of Gratuity
For government employees, the entire amount of gratuity received on retirement or death is currently exempted from income tax.
In the case of non-government employees, income tax rules on gratuity are applicable depending on whether employees are covered under the Payment of Gratuity Act, 1972 or not.
For non-government employees covered under the Gratuity Act, the income tax exemption on any gratuity received is least of the following:
• The maximum amount specified by the government which is currently Rs. 10 lakh
• Last drawn salary X 15/26 X years of service
• Actual gratuity received
For example, the last drawn salary (basic plus DA) of Mr. Ashish, for example, is Rs. 60,000 (per month) and he has worked for 25 years. The gratuity according to the formula is Rs. 8.65 lakh but suppose he has actually received a gratuity of Rs. 12 lakh.
So for income tax calculation, Rs. 8.65 lakh will be considered for exemption. So Mr. Ashish will pay tax on Rs. 3.35 lakh (Rs. 12 lakh – 8.65 lakh).

One small correction my dear friend. The ceiling on gratuity for industrial employees coming under the purview of the P.G Act, 1972 also stands enhanced to Rs. 20lakh w.e.f 29-03-2018.

No benefit in paying gratuity with monthly salary. There is no provision in the Act like interim bonus in POB Act.
Varghese Mathew
BIL,PGDPM,
9961266966.

But sir, If company pay Monthly Gratuity along with salary and at time of leaving give the residual amount gratuity ( Calculated based on Current Basic Salary), still it will be Illegal to proceed on Monthly Basis.

Regards
Payal Singh.
Sonipat, Haryana.

The monthly paid Gratuity cannot be set off against the gratuity payable on termination of service. Once the services of an employee comes to an end and if he demands payment of gratuity as per the Act, the same is due and payable in full and there cannot be any adjustment of already paid amount on this account.