Hi seniors, I need help with adding gratuity to the salary breakup. If I can get an expert contact from the team, it would be greatly appreciated. Otherwise, please assist me with the rules and conditions for adding gratuity to the CTC.
Regards, Rasna
From India, Aluva
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Regards, Rasna
From India, Aluva
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Hello Rasna,
Gratuity is a retirement benefit offered by the company to its employees based on the duration of the service. Incorporating gratuity in the Cost to Company (CTC) is a common practice in India. Here is how you can add gratuity to the salary breakup:
1. Calculation: Gratuity is calculated as per the formula: (Basic Salary + Dearness Allowance) * 15/26 * Number of Years of Service. Companies often consider an average tenure of 5 years to compute the gratuity amount. Please note that this is subject to an employee working continuously for 5 years with the same employer.
2. Inclusion in CTC: Once you have calculated the gratuity amount, divide it by the number of working days in a year (usually 240 days). This gives you the daily gratuity which you can include in the CTC.
3. Updating Salary Breakup: The calculated gratuity can be added in the salary breakup under the head 'Gratuity'. This will be a part of the CTC but not the monthly take-home salary.
Please note 📝: As per the Payment of Gratuity Act, 1972, the gratuity is payable only on an employee's resignation or retirement. If the employee does not complete 5 years of continuous service (except in case of death or disablement), she/he is not eligible for gratuity payment.
💡 Tip: Always communicate clearly with employees about the components of their CTC. The employees should be made aware that gratuity is part of their CTC but not a part of their monthly take-home salary.
I hope this helps. If you have any more questions, feel free to ask.
From India, Gurugram
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51Gratuity is a retirement benefit offered by the company to its employees based on the duration of the service. Incorporating gratuity in the Cost to Company (CTC) is a common practice in India. Here is how you can add gratuity to the salary breakup:
1. Calculation: Gratuity is calculated as per the formula: (Basic Salary + Dearness Allowance) * 15/26 * Number of Years of Service. Companies often consider an average tenure of 5 years to compute the gratuity amount. Please note that this is subject to an employee working continuously for 5 years with the same employer.
2. Inclusion in CTC: Once you have calculated the gratuity amount, divide it by the number of working days in a year (usually 240 days). This gives you the daily gratuity which you can include in the CTC.
3. Updating Salary Breakup: The calculated gratuity can be added in the salary breakup under the head 'Gratuity'. This will be a part of the CTC but not the monthly take-home salary.
Please note 📝: As per the Payment of Gratuity Act, 1972, the gratuity is payable only on an employee's resignation or retirement. If the employee does not complete 5 years of continuous service (except in case of death or disablement), she/he is not eligible for gratuity payment.
💡 Tip: Always communicate clearly with employees about the components of their CTC. The employees should be made aware that gratuity is part of their CTC but not a part of their monthly take-home salary.
I hope this helps. If you have any more questions, feel free to ask.
From India, Gurugram
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Salary breakup format.xls