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Vinod Joshi (Partner)     22 November 2011

Can company put upper cap on gratuity amount?

Friends,

I understand that the IT Law provides for IT releief for Gratuity amounts upto Rs 10 Lacs.

Taking this as the basis, can any company restrict the Gratuity amount to Rs 10 Lacs eventhough the calculation by the formula of (basic salary x no of years of service x15/24) exceeds Rs 10 Lacs. Will it be legally allowed?



Learning

 3 Replies

V. VASUDEVAN (LEGAL COUNSEL)     22 November 2011

Payment of Gratuity Act also fixes the maximum ceiling to be Rs.10 lakhs and hence such limit by a company is justified. 

vasudevan

kameswarao S (Head HR)     23 November 2011

Yes as per law the maximum limit for Gratuity is Rs.10 lakhs and anybody is eligible for 10 lakhs even as per the actual calculation it is more also.

Regards - kamesh


(Guest)

10 Laks is the maximum limit provided by the Payment of Gratuity Act.


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