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Gratuity


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CA Saroj Kumar (Keen to learn something new every moments)     06 March 2014

CA Saroj Kumar
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<5 year services employess are included just because that PGA 1972 define that when it shall become payable the company to employees ..its not mean that the company is required to pay gratuity only on gratuity amount deducted on the above of service of 5 year.

But the fact is when it become payable the company is required to pay entire amount which from the date of joining of employee this main reason by which they are making part of CTC hence they included all thsese employee whether the are below 5 year or above.

Since the payable amount are not fixed they are high risk associated with that and same time copany is also required to generate the interest on investment hence they prefer to take insurance of those payments with LIC.. 

 

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(Guest)

as- 15 does not tell us that we had to make any provision for those also who had not completed 5 years..

 

and still if the company is doing this it does not effect anything na...

 

its just creation of liability ...

 

we hadnt expensed anythinng

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CA Saroj Kumar (Keen to learn something new every moments)     06 March 2014

CA Saroj Kumar
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look AS 15 tells about the employee benefit if compny is taking benefit of employee for which anything is payable in future then it must hve to create liabity or hve to mke provision according to as-29 so...copany is not expnsed anything but taken benefit from employees today for which liabilty is continuously accumulated during the service of employees.

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Priya Agarwal (Aticled Assistant)     06 March 2014

Priya Agarwal
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Now all my doubts are clear. :) Thanku Sir for your early and valuable response.


(Guest)

friends are always welcomme for any doubt dear

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HIMANSHU (Student CA Final )     10 March 2014

HIMANSHU
Student CA Final  
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Hi I also.find such type if problem But.i our case we treat, that company.will forfeit.the amount of gratuity payable because the term of continous service is not.more than 5 years So it may be a abnormal income for the company and the institution should.have to refund the amount to.the organization. The institute cannot retain this amount since it.does not belongs to.them Thanking you

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Priya Agarwal (Aticled Assistant)     10 March 2014

Priya Agarwal
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I dont agree to this point as I have not read this thing anywhere and this is totally illegitimate. What I have studied is that LIC will adjust the amount with the employees whose gratuity is to be paid in future. .. Can you tell the source of the provision you are talking about.

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HIMANSHU (Student CA Final )     10 March 2014

HIMANSHU
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But it is also stated under the provision of the payment of gratuity act which states that, the employees has the option to request the company to transfer its gratuity amount to the organization garatuity a/c whom he or she is going to be join

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Kolluru Krishna Murty (Partner)     17 April 2014

Kolluru Krishna Murty
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From the abobe all I would like sum up for the benifit of all:

1.As per AS-15 organisations are supposed to work out the liability for all employees irrespective of the tenure of service and provide the same in accounts.This amount has to be worked out with the help of an approved valuer. Normally valuation is done on annual basis.The same may be funded or may not be funded.

2.There is no compulsion that the amount has to kept with LIC even the organisation can have a trust of its own funding as per valuation and maitaining as per guidelines of Income Tax Act and discharging the liability as per PGA.

3.Employee has no right to claim the amount unless he completes 5 years of service.But the employer showing it as part of CTC is a bargain between the employer and employee.It is also trasferable from one employee to another provided both the employers agree for the same.

4.When it is kept with LIC the amount in respect of employees who have not qualified to receive the same will be refunded back to the employer or adjusted in future payment by employer.

Hope the poits are clear.

K.Krishna Murty

 

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M.pratish (Interested to gather knowledge )     25 June 2014

M.pratish
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I need clarification on which basic gratuity is calculated in corporate /BPO companies.

  1. On the completion of 5 years of service (with out loss of pay i.e. informed and uninformed in the service)
  2. On the completion of 5 years of service (with loss of pay i.e. informed and uninformed in the service)
  3. On the completion of 5 years of service including notice period of 45days (with or without loss of pay i.e. informed and uninformed in the service)   

 

Example: employee joined a company on 3-8-2009, if he completes 3-8-2014. Then he had successfully completed 5 year with 120 days of Loss of pay, kindly explain whether that employee is eligible for gratuity or not as per Gratuity Act 1972. Kindly send my legal documents (if any)

 

(note: can also send the mail at mpratish22 @ gmail.com)

 


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