Priya Agarwal (Aticled Assistant) (319 Points)

05 March 2014  


My query is regarding Gratuity Act.

As studied in The Gratuity Act, it is mentioned that a company covered under the act is required to maintain Gratuity Fund with LIC ?

1. So first thing is - Is it Mandatory ? and if not, then how the amount of gratuity deducted (a part of CTC) is managed by the company.

2. The condition given in act is - A Company is liable to pay Gratuity to an Employee if that particular Employee completes "5 Years of Continous Service with a Particular Employer". So if an Employee leaves a company before 5 Years and since the company is showing the salary as a part of CTC what will be done with the Amount deposited with LIC. Will it be Refunded back ?

The Query as discussed above was noticed while doing the Internal Audit of a concern.

Thanks & Regards