As an employer, can I pay more gratuity apart from the mandatory additional amount under the gratuity head apart from what is calculated as per the rule?
Can I calculate gratuity for 20 days instead of 15 days (which is a formula to calculate)?
From India, Pune
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1Can I calculate gratuity for 20 days instead of 15 days (which is a formula to calculate)?
From India, Pune
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Dear friend,
As an employer, you have the option to pay additional gratuity beyond the mandatory amount as stipulated by the Gratuity Act. It is important to be aware that any surplus amount exceeding the ceiling limit, currently set at Rs. 350,000 as per the Income Tax Rules, will be subject to taxation for the recipient employee. It is essential to carefully consider the Income Tax Rules during the gratuity calculation process, as there are variations between the IT Rule formula and the Gratuity Act formula, especially concerning the computation of average salary, with one based on a 10-month calculation and the other on a 12-month calculation.
You are permitted to utilize any formula for gratuity calculation, provided that the resultant benefit is not lower than what would be received under the Gratuity Act's formula. Pay close attention to amounts within the Rs. 350,000 limit, as certain sums may still be taxable despite falling within the ceiling limit due to the tax implications outlined in the IT Rules.
I trust this information proves helpful.
Regards,
mxsingh
Acknowledge(0)Amend(0)
As an employer, you have the option to pay additional gratuity beyond the mandatory amount as stipulated by the Gratuity Act. It is important to be aware that any surplus amount exceeding the ceiling limit, currently set at Rs. 350,000 as per the Income Tax Rules, will be subject to taxation for the recipient employee. It is essential to carefully consider the Income Tax Rules during the gratuity calculation process, as there are variations between the IT Rule formula and the Gratuity Act formula, especially concerning the computation of average salary, with one based on a 10-month calculation and the other on a 12-month calculation.
You are permitted to utilize any formula for gratuity calculation, provided that the resultant benefit is not lower than what would be received under the Gratuity Act's formula. Pay close attention to amounts within the Rs. 350,000 limit, as certain sums may still be taxable despite falling within the ceiling limit due to the tax implications outlined in the IT Rules.
I trust this information proves helpful.
Regards,
mxsingh
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