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Frequently Asked Questions

A curated and categorised database of common questions regarding the law.


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NOMINATION

21 Which form has to be filled for nomination of Gratuity?

Form F has to be filled for Nomination of Gratuity.
22 Which form has to be filled for nomination of Gratuity?

Form F has to be filled for Nomination of Gratuity.
23 Who can be nominated for Gratuity?

If employee is married then the spouse can be nominated, if not then dependant parents.
24 Who can be nominated for Gratuity?

If employee is married then the spouse can be nominated, if not then dependant parents.
25 If an employee does not have dependant parents or is not married, can he/she nominate his/her brother or sister?

Yes, immediate family can be nominated, but nomination needs to be changed when the employee acquires a family
26 If an employee does not have dependant parents or is not married, can he/she nominate his/her brother or sister?

Yes, immediate family can be nominated, but nomination needs to be changed when the employee acquires a family

PAYMENT

27 What is the formula to calculate gratuity ?

Last drawn salary x 15/26 x No. of years of service where last drawn salary comprises basic+DA. 15 = 15 days salary, 26 = number of days in a month for calculation of daily salary. Gratuity is restricted to a maximum of Rs 10,00,000
28 What is the formula to calculate gratuity ?

Last drawn salary x 15/26 x No. of years of service where last drawn salary comprises basic+DA. 15 = 15 days salary, 26 = number of days in a month for calculation of daily salary. Gratuity is restricted to a maximum of Rs 10,00,000
29 Is gratuity exempt from Income Tax ?

Death-cum-retirement gratuity received by employees of central or state governments and local authorities is exempt without limit.

Gratuity received under the Payment of Gratuity Act, 1971 is exempt to the extent that it does not exceed 15 days salary for every completed year of service calculated on the last drawn salary subject to a maximum of Rs 10 lakh.

Any other gratuity is exempt to the extent that it does not exceed one half-month salary’s for each year of completed service calculated on the basis of average salary for 10 immediately preceding months subject to a maximum of Rs 10 lakh.

The ceiling of Rs 10 lakh applies to the aggregate of gratuity received from one or more employers in the same or different years.
30 Is gratuity exempt from Income Tax ?

Death-cum-retirement gratuity received by employees of central or state governments and local authorities is exempt without limit.

Gratuity received under the Payment of Gratuity Act, 1971 is exempt to the extent that it does not exceed 15 days salary for every completed year of service calculated on the last drawn salary subject to a maximum of Rs 10 lakh.

Any other gratuity is exempt to the extent that it does not exceed one half-month salary’s for each year of completed service calculated on the basis of average salary for 10 immediately preceding months subject to a maximum of Rs 10 lakh.

The ceiling of Rs 10 lakh applies to the aggregate of gratuity received from one or more employers in the same or different years.
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