Gratuity Management Services
Secure employee benefits. Stay legally compliant. Plan future payouts smartly.
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Basic Plan
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- Consultation on Removal Process
- Preparation of Required Documents
- Filing of Form DIR-11
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- Share Certificate Transfer Assistance (If applicable)
- Assistance with DIR-3 KYC (if required)
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- Digital Signature Certificate
- Assistance in Updating GST, PT, ESI, PF Records
- Dedicated Account Manager
What is Gratuity
Gratuity is a statutory retirement benefit paid by an employer to an employee for long-term service under the Payment of Gratuity Act, 1972.
It is a financial appreciation for employees who have completed five or more years of continuous service.
Gratuity is a lump-sum amount that an employer pays to an employee as a thank you for long-term service when they leave the company.
It becomes payable when an employee:
- Resigns
- Retires
- Becomes disabled
- Passes away (to their nominee)
Eligibility:
- Employee must complete 5 years of continuous service (not required in case of death/disability)
- The company must have 10 or more employees
Why is Gratuity Management Important
Gratuity is not just a legal rule. It’s a key part of your HR and financial planning.
Regulatory Compliance
Avoid penalties under the Gratuity Act and labour laws.
Financial Planning
Avoid sudden cash outflows at employee exit.
Employee Retention & Satisfaction
Gratuity builds long-term loyalty and a strong employer brand.
Tax Benefits
Employers can get tax deductions on contributions to an approved gratuity fund.
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How is Gratuity Calculated
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Gratuity = (Last Drawn Salary × 15 × Number of Years of Service) / 26
Where:
- Salary = Basic + Dearness Allowance
- 15 = 15 days’ salary for every completed year
- 26 = Number of working days in a month
Example:
If an employee earns ₹30,000/month and has worked for 7 years:
Gratuity = (30,000 × 15 × 7) / 26 = ₹1,21,154
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You Need to Know Before Managing Gratuity
Follow these simple steps to Managing Gratuity
Gratuity is governed by:
- The Payment of Gratuity Act, 1972
- Income Tax Act, 1961
- Labour Welfare Laws
Failure to comply can lead to:
- Penalties up to ₹10,000 and additional fines
- Imprisonment (in severe non-payment cases)
- Damage to employer reputation
Employers can create an Approved Gratuity Trust to:
- Manage future liabilities
- Avail tax exemption on contributions
- Fund gratuity payments over time
This ensures cash flow stability and peace of mind.
Required for:
- Annual financial reporting (AS 15 / IND AS 19)
- Calculating liability and provision in company books
- Trust funding strategy
Actuarial valuation considers:
- Age of employees
- Expected years of service
- Salary growth
- Attrition & mortality rates
We work with certified actuaries to provide accurate, audit-ready reports.
✅ Contributions to an Approved Gratuity Fund are tax-deductible under Section 36(1)(v) of the Income Tax Act.
✅ Gratuity payments made directly from the company account (without a trust) may have limited tax benefits.
Gratuity received is:
- Exempt up to ₹20 lakhs for private-sector employees (lifetime limit)
- Fully exempt for government employees
- Partially taxable if exceeding the exemption limit
We help companies and employees with tax-efficient planning and documentation.
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Our Gratuity Management Services Include
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For Employers
- End-to-end Gratuity Policy Design
- Gratuity Trust Creation & Registration (with Income Tax Dept.)
- Trust Deed & Rules Drafting
- Actuarial Valuation Reports (AS 15 / Ind AS 19 compliant)
- Gratuity Payment Processing & Record Keeping
- Employee-wise Gratuity Tracking
- Tax Planning & Advisory
- Compliance with Labour Laws & Gratuity Act
For Employeesons
- Gratuity Eligibility Advisory
- Individual Gratuity Calculation
- Tax Filing Support for Gratuity Income
- Nominee Management Assistance
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