Can any one tell me how much amount to be deduct for gratuity in a month? My Gross salary is 15000/M Regards, Rajesh
From India, Hyderabad
Acknowledge(1)
Amend(0)
1From India, Hyderabad
Acknowledge(1)Amend(0)
It depends on how much you are earning in a month?how can we tell without knowing your salary?
From India, Chandigarh
Acknowledge(1)
Amend(0)
From India, Chandigarh
Acknowledge(1)Amend(0)
Dear friend,
Gratuity is the amount to be paid to the employee by the management upon completion of 5 years of uninterrupted service; hence, there is no question of any amount from the employee, like the deductions we will be making towards ESI, PF, PT, and Labour Welfare Fund.
Thanks and regards,
Kamesh
From India, Hyderabad
Acknowledge(0)Amend(0)
Gratuity is the amount to be paid to the employee by the management upon completion of 5 years of uninterrupted service; hence, there is no question of any amount from the employee, like the deductions we will be making towards ESI, PF, PT, and Labour Welfare Fund.
Thanks and regards,
Kamesh
From India, Hyderabad
Acknowledge(0)Amend(0)
Thanks for the information. But I would like to know, do you pay the employees a one-time gratuity upon completion of 5 years, using the gratuity formula, or do we contribute monthly? If we contribute monthly, like 250 or 500 rupees based on the salary, it would be easier, right?
From India, Hyderabad
Acknowledge(0)Amend(0)
From India, Hyderabad
Acknowledge(0)Amend(0)
Dear Rajesh, there is no question of a monthly payment, not even upon completion of 5 years. An employee is eligible for gratuity only if they have completed five years of continuous service or more when leaving the company. Even if you work for 4+ years, you are not entitled to the gratuity amount.
In the above circumstances, it is not possible to pay on a monthly basis. According to the law, payment is only made after the completion of 5 years of continuous service.
Regards,
Kamesh
From India, Hyderabad
Acknowledge(0)Amend(0)
In the above circumstances, it is not possible to pay on a monthly basis. According to the law, payment is only made after the completion of 5 years of continuous service.
Regards,
Kamesh
From India, Hyderabad
Acknowledge(0)Amend(0)
Dear All, If it is for CTC calculation on gratuity, then it will be - 4.81% of one’s monthly basic. Post your question clearly.. with Warm regards, S.Sethupathy Excellent HR Services.
From India, Coimbatore
Acknowledge(0)Amend(0)
From India, Coimbatore
Acknowledge(0)Amend(0)
I see companies paying gratuity after 2yrs of service how come they do such things when it is not the act to do so ?
From India, Hyderabad
Acknowledge(0)Amend(0)
From India, Hyderabad
Acknowledge(0)Amend(0)
From your clarification, I understand that Gratuity would be paid after the completion of 5 years, right? Now, suppose my gross salary is 25,000, and I have completed 5 years of active service. Will the company pay me a lump sum amount, e.g., 70-80K at once?
From India, Hyderabad
Acknowledge(0)Amend(0)
From India, Hyderabad
Acknowledge(0)Amend(0)
Dear Rajesh, please go through my posting very carefully. If you are continuing in the same company after completion of 5 years, then you won't get anything. However, when you have resigned and are leaving the company, you will receive your Gratuity amount. That is, after 20 years of continuous service, if you are leaving the company, you are eligible for that amount, and the maximum limit is raised to 10 lakhs.
Gratuity Payment Policies
Another query you have is that some companies pay gratuity after 2 years of service. The management/companies can also pay on a daily basis on various heads like Gratuity, ex-gratia, production bonus, etc., if they have the necessary funds. However, the Gratuity under Statute should be paid to the employee at the time of leaving the organization after completion of 5 years of continued service.
I hope this clarifies things for you.
Regards,
Kamesh
From India, Hyderabad
Acknowledge(0)Amend(0)
Gratuity Payment Policies
Another query you have is that some companies pay gratuity after 2 years of service. The management/companies can also pay on a daily basis on various heads like Gratuity, ex-gratia, production bonus, etc., if they have the necessary funds. However, the Gratuity under Statute should be paid to the employee at the time of leaving the organization after completion of 5 years of continued service.
I hope this clarifies things for you.
Regards,
Kamesh
From India, Hyderabad
Acknowledge(0)Amend(0)
Please be very clear that NO DEDUCTIONS are to be made from your Gross Salary towards Gratuity. If it is being done in your organization, it is illegal.
Gratuity is payable by the employer to an employee who has completed at least 5 years of continuous employment, at the time of leaving the Company.
Regards,
Vasant Nair
---
Can anyone tell me how much amount to be deducted for gratuity in a month? My Gross salary is 15,000/M.
Regards,
Rajesh
From India, Mumbai
Acknowledge(0)Amend(0)
Gratuity is payable by the employer to an employee who has completed at least 5 years of continuous employment, at the time of leaving the Company.
Regards,
Vasant Nair
---
Can anyone tell me how much amount to be deducted for gratuity in a month? My Gross salary is 15,000/M.
Regards,
Rajesh
From India, Mumbai
Acknowledge(0)Amend(0)
Understanding Gratuity Payment Under the Gratuity Act
It is acceptable that, as per the Gratuity Act, after the completion of 5 years of uninterrupted service, the employee will receive gratuity. However, if the management wishes, they may provide it after the completion of 2 years as well (for this, they have to pass a resolution with the insurance company).
For the CTC Circle, gratuity may be added up (this amount should be purely from the employer's side). Whatever the gratuity amount is reimbursed (> 5 years or as per resolution) is paid by the employer annually as a renewal of the premium amount to the insurance company.
Gratuity Formula
The gratuity formula is given below:
- Last Basic + DA (e.g., Rs. 10,000/-) i.e., Rs. 10,000 X 15 Days X 5 (No. of years of service) / 26 Days = Rs. 28,846/- (Total amount for 5 years of service)
- Rs. 5,769/- (For 1 year)
- Rs. 481/- (For 1 month) i.e., at the rate of 4.81% {Some companies may add this for the CTC Circle}.
If any information is missed out or you want to add more, please let me know.
Thanks & Regards,
Avinash Kumar.K
From India, Bangalore
Acknowledge(0)Amend(0)
It is acceptable that, as per the Gratuity Act, after the completion of 5 years of uninterrupted service, the employee will receive gratuity. However, if the management wishes, they may provide it after the completion of 2 years as well (for this, they have to pass a resolution with the insurance company).
For the CTC Circle, gratuity may be added up (this amount should be purely from the employer's side). Whatever the gratuity amount is reimbursed (> 5 years or as per resolution) is paid by the employer annually as a renewal of the premium amount to the insurance company.
Gratuity Formula
The gratuity formula is given below:
- Last Basic + DA (e.g., Rs. 10,000/-) i.e., Rs. 10,000 X 15 Days X 5 (No. of years of service) / 26 Days = Rs. 28,846/- (Total amount for 5 years of service)
- Rs. 5,769/- (For 1 year)
- Rs. 481/- (For 1 month) i.e., at the rate of 4.81% {Some companies may add this for the CTC Circle}.
If any information is missed out or you want to add more, please let me know.
Thanks & Regards,
Avinash Kumar.K
From India, Bangalore
Acknowledge(0)Amend(0)
Kamesh,
Thanks for the information. But I would like to know, do you pay a one-time gratuity to employees upon completion of 5 years using the gratuity formula, or do you contribute monthly? If we contribute monthly, like 250 or 500 rupees based on the salary, it would be easier, right?
Are you an employee from whose salary contribution towards gratuity is deducted, or an HR professional deducting contributions from employee salaries towards gratuity? I wonder if your company is operating in violation of service laws!
Regards
From India, Delhi
Acknowledge(0)Amend(0)
Thanks for the information. But I would like to know, do you pay a one-time gratuity to employees upon completion of 5 years using the gratuity formula, or do you contribute monthly? If we contribute monthly, like 250 or 500 rupees based on the salary, it would be easier, right?
Are you an employee from whose salary contribution towards gratuity is deducted, or an HR professional deducting contributions from employee salaries towards gratuity? I wonder if your company is operating in violation of service laws!
Regards
From India, Delhi
Acknowledge(0)Amend(0)
I see companies paying gratuity after 2 years of service. How come they do such things when it is not the right thing to do?
Understanding Gratuity Payments
The Payment of Gratuity Act clearly states that if the company's terms are more beneficial than the provisions of the Act, an employee has the right to receive those benefits. Companies are allowed to provide gratuity even before an employee completes 5 years of service.
The Act sets the minimum standard that companies must adhere to, ensuring they do not offer benefits lower than what is mandated by law.
From India, Delhi
Acknowledge(0)Amend(0)
Understanding Gratuity Payments
The Payment of Gratuity Act clearly states that if the company's terms are more beneficial than the provisions of the Act, an employee has the right to receive those benefits. Companies are allowed to provide gratuity even before an employee completes 5 years of service.
The Act sets the minimum standard that companies must adhere to, ensuring they do not offer benefits lower than what is mandated by law.
From India, Delhi
Acknowledge(0)Amend(0)
Dear All, Now we know that, a person has completed 4 yrs 9 months of his service is eligible for Gratuity...
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
I agree with Mr Vasant Nair. There is NO deductions for the Gross for Gratuity. However, the CTC may include the Gratuity element - 4.81% (or round-off to 5%) of the Basic Pay. Rajusiachen
From India, Coimbatore
Acknowledge(0)Amend(0)
From India, Coimbatore
Acknowledge(0)Amend(0)
Dear All, Kindly let me know that gratuity amount is tax exempted or not and In CTC is necessary to deduct 4.81% from monthly salary. Thanks & regards,
From India, Ambala
Acknowledge(0)Amend(0)
From India, Ambala
Acknowledge(0)Amend(0)
Dear All It will be calculated as per: (last drawn Basic Salary/26*15)*No.of Years worked any employee should have to do work atleast for 4 years & 240 days. Regards: Manoj Garg 09988878006
From India, Chandigarh
Acknowledge(0)Amend(0)
From India, Chandigarh
Acknowledge(0)Amend(0)
If gratuity is part of CTC, then 4.81% of basic salary. Now gratuity limit is Rs. 10 lakhs.
From India, Indore
Acknowledge(0)Amend(0)
From India, Indore
Acknowledge(0)Amend(0)
Understanding Gratuity Payments
Gratuity is the amount to be paid to the employee by the employer upon completion of 5 years of uninterrupted service, retirement, or retrenchment. In case of death before completing 5 years of service, it will be payable up to the date of death.
If your employer wants to plan for gratuity, ask them to set aside 4.81% of the basic salary plus dearness allowance wages every month or consider opting for a Gratuity Policy from an Insurance Company.
Regards,
RA LAWANDE
From United States, San Jose
Acknowledge(0)Amend(0)
Gratuity is the amount to be paid to the employee by the employer upon completion of 5 years of uninterrupted service, retirement, or retrenchment. In case of death before completing 5 years of service, it will be payable up to the date of death.
If your employer wants to plan for gratuity, ask them to set aside 4.81% of the basic salary plus dearness allowance wages every month or consider opting for a Gratuity Policy from an Insurance Company.
Regards,
RA LAWANDE
From United States, San Jose
Acknowledge(0)Amend(0)
I would like to inform you of one thing: gratuity calculation is made only on the last Basic + DA amount when an employee leaves the organization after completing 5 years. Generally, the accounts department includes some amount as gratuity in their balance sheet to receive tax benefits, but there is no deduction from the employee's side. For better clarification, kindly refer to the Gratuity Act.
Regards,
Ratikanta Rath
From India, Durgapur
Acknowledge(0)Amend(0)
Regards,
Ratikanta Rath
From India, Durgapur
Acknowledge(0)Amend(0)
Understanding Gratuity Deductions
There is no deduction that can be made for gratuity. It is given in gratitude to an employee for serving a company after completing five years of service in an organization. Gratuity is paid by the employer, which amounts to fifteen days' salary of the basic pay for every completed year. Therefore, there is no such deduction.
Nowadays, companies are following the Cost to Company (CTC) model, which includes everything they provide to an employee. However, this can be negotiated by an employee with the company when joining any organization, and it varies from company to company.
Regards
From United States, Chicago
Acknowledge(0)Amend(0)
There is no deduction that can be made for gratuity. It is given in gratitude to an employee for serving a company after completing five years of service in an organization. Gratuity is paid by the employer, which amounts to fifteen days' salary of the basic pay for every completed year. Therefore, there is no such deduction.
Nowadays, companies are following the Cost to Company (CTC) model, which includes everything they provide to an employee. However, this can be negotiated by an employee with the company when joining any organization, and it varies from company to company.
Regards
From United States, Chicago
Acknowledge(0)Amend(0)
It is assumed that your reply is in connection with the attached gratuity calculation sheet. First of all, thanks for your comments. In the policy of Gratuity, it is clearly mentioned in every company's policy that after 5/3/1 year(s), the company fixes the maturity of gratuity. "Regular staff of the company will be entitled to gratuity equivalent to one month's Gross salary per year after completion of ____ years of service. After this, I don't think if a person is absent for about 100 days in a year, they can meet the full-year gratuity for that year.
Secondly, you are requested to please share your knowledge regarding "CTC" in detail, as I don't know about it. Thanks for your cooperation in advance.
Regards,
Kashan
From Pakistan
Acknowledge(0)Amend(0)
Secondly, you are requested to please share your knowledge regarding "CTC" in detail, as I don't know about it. Thanks for your cooperation in advance.
Regards,
Kashan
From Pakistan
Acknowledge(0)Amend(0)
I found your answer very easy and simple to understand, especially the calculation part. I am very thankful to you and all who posted their comments. Thanks to Cite HR. Thanks to everyone.
Regards,
Rajesh.N
From India, Hyderabad
Acknowledge(0)Amend(0)
Regards,
Rajesh.N
From India, Hyderabad
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Gratuity-Leave calculation on CTC-Rev..xls
Employee Benefits.doc