For a person who is earning a basic salary of 18K, the PF deduction is 720 (which 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 the 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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Can someone help me with the calculation as there is more gratuity deduction compared to the 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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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.
Regards,
B. Saikumar
From India, Mumbai
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57Regards,
B. Saikumar
From India, Mumbai
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EPF and Gratuity Contribution Details
1. The maximum contribution to EPF, in compliance with the ceiling salary of Rs. 6,500, is Rs. 780, not Rs. 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 exempt from Income Tax. If the employer wishes, they may pay in addition to the above Rs. 10,00,000, which is liable to pay income tax.
Regards,
Abbas.P.S
From India, Bangalore
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1. The maximum contribution to EPF, in compliance with the ceiling salary of Rs. 6,500, is Rs. 780, not Rs. 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 exempt from Income Tax. If the employer wishes, they may pay in addition to the above Rs. 10,00,000, which is liable to pay income tax.
Regards,
Abbas.P.S
From India, Bangalore
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ESI-PF-Gratuity .xls
SALARY CAN BE SPLIT INTO COMPONENTS BUT NOT LESS THAN THE MINIMUM WAGES.docx