What is the practice being followed for payment of gratuity for employees who have accrued gratuity over 20 Lakhs? Do companies accrue gratuity beyond 20 Lakh?
From India, Delhi
From India, Delhi
Dear Ms Anjali Sharma,
Whether to pay the gratuity beyond Rs 20 Lakh or not is a call that the company has to take. If paid, then it will be treated as ex gratia. Let us consider the following case:
Assume that a person 'A' joins the 'X' company at the age of 20. He serves for 38 years and retires at the age of 58. While retiring, his gross salary was Rs 2,00,000/- per month whereas his basic was Rs 1,00,000/- per month.
Formula to Calculate Gratuity = n*b*15 / 26
Where n = Tenure of service completed in the company
b = Last drawn basic salary + dearness allowance
Therefore, his gratuity = (38 x Rs 1,00,000 x 15)/26 = Rs 21,92,308/-
Of the above amount, Rs 20,00,000/- will be gratuity and the additional amount, Rs 1,92,308/- if the company decides to pay, then it will be treated as ex gratia.
Hope my calculation is correct and the other learned members may suggest corrections if required.
Thanks,
Dinesh Divekar
From India, Bangalore
Whether to pay the gratuity beyond Rs 20 Lakh or not is a call that the company has to take. If paid, then it will be treated as ex gratia. Let us consider the following case:
Assume that a person 'A' joins the 'X' company at the age of 20. He serves for 38 years and retires at the age of 58. While retiring, his gross salary was Rs 2,00,000/- per month whereas his basic was Rs 1,00,000/- per month.
Formula to Calculate Gratuity = n*b*15 / 26
Where n = Tenure of service completed in the company
b = Last drawn basic salary + dearness allowance
Therefore, his gratuity = (38 x Rs 1,00,000 x 15)/26 = Rs 21,92,308/-
Of the above amount, Rs 20,00,000/- will be gratuity and the additional amount, Rs 1,92,308/- if the company decides to pay, then it will be treated as ex gratia.
Hope my calculation is correct and the other learned members may suggest corrections if required.
Thanks,
Dinesh Divekar
From India, Bangalore
Find answers from people who have previously dealt with business and work issues similar to yours - Please Register and Log In to CiteHR and post your query.