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GRATUITY

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GRATUITY - PowerPoint PPT Presentation


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GRATUITY. Introduction. Paid for faithful continuous service in the organization Payable on completing 5 years of continuous service with the organization Includes probation period The above rule is waived of in the eventuality of Death Permanent disablement. Applicability.

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Presentation Transcript
introduction
Introduction
  • Paid for faithful continuous service in the organization
  • Payable on completing 5 years of continuous service with the organization
    • Includes probation period
  • The above rule is waived of in the eventuality of
    • Death
    • Permanent disablement
applicability
Applicability
  • Applicable to those organizations where employee strength is more than 10
family
Family
  • Himself/ Herself
  • Spouse
  • Children (married or unmarried)
  • Dependent parents
  • Dependent in-laws
  • Widow & children of predeceased son
  • Adopted children
definitions
Definitions
  • Superannuation
    • Attainment of age for vacating employment
  • Retirement
    • Termination of employment other than superannuation
  • Wages
    • Earned while on duty or on leave.
    • Includes DA
    • Does not include bonus, HRA, overtime, commission etc.
payment of gratuity
Payment of Gratuity
  • Gratuity can be paid to an employee when
    • He is superannuated
    • Resigned/ retired after 5 years of continuous service
    • Permanent disablement
    • Death
  • If a person has completed 240 days in a year on his/ her fifth year of service, he/ she is eligible for gratuity
calculation
Calculation
  • The formula for calculating gratuity is as follows –

[(Salary*15)/26]*service period

Where,

  • Salary = Basic + DA
calculation of gratuity in ctc
Calculation of gratuity in CTC
  • 5% of basic salary
    • In some cases it is actually 4.81% which is rounded up to the nearest integer
taxability
Taxability
  • Not taxable up to the ceiling of 3.5 lakhs.
  • Any amount above the same will be taxable.
  • The ceiling is applicable only once during the entire service period

e.g.: If the person changes his job more than once, then he will avail the benefit of tax savings upto 3.5 lakh only once.

withdrawal of gratuity
Withdrawal of gratuity
  • Non transferable
  • The LIC draws a cheque in the favor of the organization/ Gratuity Trust
  • In turn draws cheque in favor of the employee
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