Gratuity limit
DJ
(Querist) 14 December 2011
This query is : Resolved
Dear All,
One of my employee completed 20 years of services & we computed his gratuity Approx. Rs. 13,50,000/-, but the law said ceiling Rs. 10,00,000/-, so guide me whether I will pay him Rs. 13,50,000/- or Rs. 10,00,000/-
Please do the needful,
Regards,
Dhananjay
A V Vishal
(Expert) 15 December 2011
Rs13.50 lakhs out of which Rs.10 lakhs is exempt and the balance taxable
Raj Kumar Makkad
(Expert) 15 December 2011
I do agree with vishal. Amount shall be actual out of which Rs. 10 lakh is exempted and balance amount is taxable.
Isaac Gabriel
(Expert) 15 December 2011
If the employee's Gratuity is linked with any agency,i.e Group gratuity of the LIC etc., there is no limit as per section 4(5) of the Payment of Gratuity Act.Else, it has to be limited to 10,00,000/.
Guest
(Expert) 15 December 2011
Interpretation of Mr. Vishal is right, as section 4(5) of the Payment of Gratuity Act clearly allows better terms on the part of the employer and the right of the employee to receive paaayment accordingly. However, for the purpose of taxation, provisions of taxation haave to be taken care of for the excess payment of gratuity than the exempted limit of Rs. 10 Lakhs.
The aforesaid sub-section, states as follows:
"Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer."
prabhakar singh
(Expert) 18 December 2011
Yes! Only Mr.A V Vishal and experts in agreement with him are right.
