Hi Sir/Madam,
For a person who is earning the basic salary of 18K, the PF deduction is 720 (may be the maximum cap set by the firm or government). However, the gratuity deduction is 900+. Why is there no maximum cap set for gratuity?
Can someone help me with the calculation as there is more gratuity deduction compared to PF deduction? Can't this gratuity be calculated based on the 6.5K basic salary as they may be calculating the PF?
Thank you.
From United States, Cambridge
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For a person who is earning the basic salary of 18K, the PF deduction is 720 (may be the maximum cap set by the firm or government). However, the gratuity deduction is 900+. Why is there no maximum cap set for gratuity?
Can someone help me with the calculation as there is more gratuity deduction compared to PF deduction? Can't this gratuity be calculated based on the 6.5K basic salary as they may be calculating the PF?
Thank you.
From United States, Cambridge
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Dear Shashank,
Unlike the P.F. Act, the Gratuity Act does not envisage any deduction from the salary of the employee, and there is no wage limit for being eligible for gratuity under the Act.
B. Saikumar
HR & Labour Law Advisor
Mumbai
09930532927
From India, Mumbai
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57Unlike the P.F. Act, the Gratuity Act does not envisage any deduction from the salary of the employee, and there is no wage limit for being eligible for gratuity under the Act.
B. Saikumar
HR & Labour Law Advisor
Mumbai
09930532927
From India, Mumbai
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1. The maximum contribution to EPF in compliance with the ceiling salary of Rs. 6,500 is Rs. 780, not 720.
2. No contribution from the employee's side is required for gratuity. As per the Payment of Gratuity Act, the ceiling amount of gratuity is Rs. 10,00,000, which is exempted from Income Tax. If the employer wishes, he may pay in addition to the above Rs. 10,00,000, which is liable to pay income tax.
Abbas.P.S
From India, Bangalore
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2. No contribution from the employee's side is required for gratuity. As per the Payment of Gratuity Act, the ceiling amount of gratuity is Rs. 10,00,000, which is exempted from Income Tax. If the employer wishes, he may pay in addition to the above Rs. 10,00,000, which is liable to pay income tax.
Abbas.P.S
From India, Bangalore
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