Gratuity Trust Fund Consultant in Delhi/NCR region

Gratuity Trust Fund Consultant in Delhi/NCR Region.

The Payment of Gratuity (Amendment) Act 2018 provides a Social Security to Employees working in all organizations such as factory, mine, oilfield, port, railways, plantation, shops, establishments or educational institution having 10 or more employees on any day in the preceding 12. 

Since an employee sacrifices prime time of his life for the development, prosperity and betterment of his employer, the employer pays his employee gratuity as a graciousness or gift to him, when he no longer serves him. At the time of retirement employee generally has no source of regular income and due to old age- increasing medical expenses and increasing inflation to meet with day to day expenses. So to cope up with all these uncertainties, Gratuity Payment becomes a financial support to meet necessary expense as a single one-time payment.

The amount of Gratuity payable to an employee on his exit from service, according to “The Payment of Gratuity (Amendment) Act 2018 ”, in force at present, is  :-

(Salary of the employee at the time of exit) x (15/26) x (Number of Years of Service at the time of exit)

This is subject to a ceiling limit of 20,00,000/- effective from 29.03.2018.

Gratuity is payable to an employee on exit from service after he has rendered continuous service for not less than five years:

    (a) On his superannuation

    (b) On his resignation

    (c) On his death or disablement due to employment injury or disease.

In case of (c) vesting condition of 5 years does not apply.

Gratuity Benefits depends upon last drawn monthly wages and is linked to length of service, normally it goes on increasing from the time when the employee joins service and the time of his exit from service due to annual increase in salary and increasing service period.

Gratuity Calculation and it payment to employee by employers and its funding arrangement (i.e. Setup of Group Gratuity Trust Fund) requires technical and in-depth knowledge of  rules/regulations and amendments of “The Payment of Gratuity (Amendment) Act 2018 ”, and hence Consultation Professionals dealing with this subject becomes mandatory for HR/Accounts/Financial Planning Departments of organization.   

We have a team leading Professionals, Litigation Partners, Chartered Accountants, Company Secretaries & Heads of Insurance Companies having decades of experience in providing their services to our clients spread in all sectors of the Indian Economy, in the Public & Private Sectors which covers areas of Manufacturing, Software, Technology, Electricity, Electronics, Call Centers, Banks, Educational Institutes, Schools, Universities,  Hotels, Hospitals, Hospitality Companies etc. etc.

We offer telephonic/meeting consultation for the following services:- 

1. Consultation for Gratuity Computation related issues.

2. Consultation for Legal Issues involved in Gratuity Benefits Payments to Private Sector Employees and Private Sector Teachers.

3. Consultation for Accounting Aspects of Gratuity Trust Fund.

4. Consultation for Income Tax Approvals of Gratuity Trust Documentation.

5. Consultation for Self Managed Gratuity Trust Fund Advisory.

6. Consultation for Short Term/Long Term Investment for Gratuity Liability.

7. Consultation for  Calculation of Gratuity Payment as per "The Payment of Gratuity Act 2018 Amended.

In case employee/employer needs any consultation in the matters of “The Payment of Gratuity (Amendment) Act 2018 ”  you may directly contact us as the following :-

Tikaram Chaudhary

Head Consultant

Gratuity Trust Fund Consultant

Mobile Number  - 9211637063

Email ID - tikaramchaudhary@gmail.com

Linkedin Profile : https://www.linkedin.com/in/tikaram-chaudhary-a5727848

Blog :http://gratuitytrustfundconsultantindelhincr.blogspot.com

All Consultancy Services provided by us are subject to terms & conditions will be stated when a consultation job is accepted & also note that Telephonic Consultation charges to be in Advance via online mode by the client.

Group Gratuity Benefits Consultant in Delhi/Gurgaon/ Ghaziabad/Noida Region

An overview about Gratuity Benefits 
When an employee leaves the service, employer rewards him for his accrued service in the organization. He does so by giving you a free lump sum of cash - called gratuity in financial parlance - on your exit. The amount that an employer gives is based on the number of years of service employee have put into the organization.

As per Gazette notification issued by Ministry of Law & Justice in The Gazette of India on dated 29th March 2018 as applicable WEF same date amends the Ceiling Limit from "ten lakh rupees" to "such amount may be notified by the Central Government from time to time" is substituted. A pdf copy of same is available at following weblink:- http://egazette.nic.in/WriteReadData/2018/184298.pdf

When is Employee entitled to Gratuity? 

Gratuity in earlier days was rather arbitrary and completely hostage to the whims of the employer. A wealthy, well-established employer would reward his dedicated employees and the not so rich would refuse such generosities. This led to a lot of discord and finally, the government stepped in, passing the Payment of Gratuity Act, 1972, making it mandatory for all employers with more than 10 employees to give them the gratuity. Employees, as defined here, are the ones hired on company payrolls. Trainees are not eligible and gratuity is paid on the basis of the employee's basic plus dearness allowance if any.

How much can an employee get? 

An employee becomes entitled to a gratuity on resignation or on retirement after five years# or more of service. As per the Act, the gratuity amount is 15 days' wages multiplied by the number of years put in by you. Here wage means your basic plus dearness allowance. Take the monthly salary drawn by you last (basic plus dearness allowance) on resignation or retirement and divide it by 26, assuming there are four Sundays in a month. This is your daily salary. Multiply this amount by 15 days and further with the number of years you have put into service. Gratuity is payable to an employee on exit from service after he has rendered continuous service for not less than five years:

(a) On his superannuation
(b) On his resignation
(c) On his death or disablement due to employment injury or disease.

In case of (c) vesting condition of 5 years does not apply. get at the time of retirement/resignation after completion of 5 years of continuous service. In case of Death of Employee, his/her nominee/nominees without any vesting condition of 5 years as gratuity is payable to nominee immediately after death of an employee.

History of amendments in Gratuity Act? 

Gratuity benefit is usually payable at the time of retirement. Since at the time of retirement employee generally has no source of regular income and due to old age- increasing medical expenses and increasing inflation to meet with day to day expenses. So to cope up with all these uncertainties, Gratuity Payment becomes a financial support to meet necessary expense as a single one-time payment. The rules and regulations being prescribed in Gratuity Act 1972 need to be amended from time to time and Labour Ministry tries to provide full justice by making amendments to the above act, in the national Parliament. Some of the amendments in the Payment of Gratuity Act 1972 are as follows:-

The first amendment made by the Payment of Gratuity (Amendment) Act, 1984 inter alia provides for raising the wage limit for coverage from Rs 1000/- to Rs 1600/- per month and appointment of Inspectors.

The second amendment made by the Payment of Gratuity (Second Amendment) Act, 1984 inter alia re-defined the term ‘continuous service’ and provided for the grant of exemption to a class of employees from the operation of the Act.

The third amendment made by the Payment of Gratuity (Amendment) Act, 1987 inter alia provided for:-

(a) Raising the wage limit for coverage from Rs 1,600/- to Rs 2,500/- per month, which was further raised to Rs 3,500/- p.m.

(b) Replacing the ceiling of twenty month’s wages for payment of gratuity by a monetary ceiling of Rs 50,000/-

(c) Making it obligatory for the employers to pay simple interest at a specified rate if the gratuity is not paid within 30 days from the date it falls due.

(d) Compulsory insurance/setting of gratuity fund for payment of gratuity.

In later amendments, wage limit was removed altogether and the ceiling limit was revised from time to time. Ceiling limit was raised to Rs 100,000 from Rs 50,000 in 1994 and further raised to Rs. 3,50,000 in 1997.

As per Payment of Gratuity (Amendment) Act 2009, all Teaching Staff in all the unaided educational institutions eligible for payment of gratuity with retrospective effect from 1997.

As per the Payment of Gratuity (Amendment) Act 2010, the ceiling limit of Gratuity was raised from 3.50 Lakhs to 10 Lakhs effective from 25.05.2010.

As per Gazette notification issued by Ministry of Law & Justice in The Gazette of India on dated 29th March 2018 as applicable WEF same date amends the Ceiling Limit from "ten lakh rupees" to "such amount may be notified by the Central Government from time to time" is substituted.

Why is Consultation needed by the employers/Schools and employees/Teachers in Gratuity Benefits related matter? 
As informed in the above write-up, Gratuity Benefits are governed by the Payment of Gratuity Act and it is an additional benefit that employees/teachers in the Private Sector Companies and Private Schools. Due to complexity in the technical matters related to the Payment of Gratuity Act and due to lack of Proper Financial Management of Gratuity Liability in the starting years.  Private companies/private schools try to avoid to make the payment of Gratuity Payment to their employees/teachers, so lots of litigations arose between employers (i.e. Private Companies and Schools) and employees/Teachers. In such situation consultation of Professionals is required.

We have a team of highly skilled and talented Professionals having decades of experience in handling the following matters :-

1. Legal Issues involved in Gratuity Benefits Payments to Private Sector Employees and Private Sector Teachers. 

2. Accounting Aspects of Gratuity Trust Fund. 

3. Income Tax Approvals of Gratuity Trust. 

4. Gratuity Computation related issues. 

5. Self Managed Gratuity Trust Fund Advisory. 

6. Advisory for Short Term/Long Term Investment for Gratuity Liability.

7. Assistance in the Calculation of Gratuity Payment as per "The Payment of Gratuity Act 2017 Amended.

In case of any requirement in any of the above matter you may contact us at the following :-

Tikaram Chaudhary

Head Consultant - Group Gratuity Benefits

Mobile Number  - 9211637063

Email ID - tikaramchaudhary@gmail.com

Blog :http://gratuitytrustfundconsultantindelhincr.blogspot.com/

*Terms and condition will apply.

Benefits of Creating Group Gratuity Trust Fund with Insurance Company

Gratuity being an important retirement benefit to employees in the Indian context, is relevant for all organizations (i.e. MNC's, Schools and Other business entities) having more than 10 employees . Since an employee sacrifices prime time of his life for the development, prosperity and betterment of his employer, employer pays his employee gratuity as a graciousness or gift to him, when he no longer serves him.

Gratuity Benefit falls in the category of “Defined Benefits” & amount of Gratuity payable to an employee on his exit from service, according to “ Payment of Gratuity Act 1972”, in force at present, is  :-

(Salary of the employee at the time of exit) x (15/26) x (Number of Years of Service at the time of exit)

This is subject to a ceiling limit of 20,00,000/-.

Gratuity is payable to an employee on exit from service after he has rendered continuous service for not less than five years:

    (a) On his superannuation
    (b) On his resignation
    (c) On his death or disablement due to employment injury or disease.

In case of (c) vesting condition of 5 years does not apply.

Gratuity Benefits depends upon last drawn monthly wages and is linked to length of service, normally it goes on increasing from the time when the employee joins service and the time of his exit from service due to annual increase in salary and increasing service period.


Let us take example of employee and understand the Impact of "Annual Increase in Salary and Increasing Service Period" on Gratuity Benefits payable to him on his date of retirement. The particulars of  employee are as under :-

Name of Employee........................................ Mr. Bhanu Pratap
Date of Birth.................................................. 31.03.1984
Date of Joining............................................... 31.03.2008
Basic Salary on 31.03.2017........................... 5200/-
Retirement Age.............................................. 60 Years
Annual Salary Increase.................................. 8% p.a.
       
Calculation of Gratuity Payable on 31.03.2017    
       
Age on 31.03.2017...............................................    33
Completed years of Service.................................. 10
Remaining Service Period upto Retirement........ 27
Gratuity Factor....................................................... 15/26
Ceiling Limit on Gratuity...................................... 10,00,000/-
       
Gratuity Payable = (15/26) x No of Completed years of Service Upto 31.03.2017 x Basic Salary
                            = (15/26) x 10 x 5200
                            =30,000/-

Table showing the Impact of Annual Increase in Salary and Increasing Service Period on Gratuity Payable to Mr. Bhanu Pratap on 31.03.2017 & on his retirement.
Year	Gratuity Payable Date	Expected Basic Salary increased by 8% p.a.	Expected Service Period	Gratuity Factor	Expected Gratuity Payable
0	31.03.2017	5200	10	15/26	30000
1	31.03.2018	5616	11	15/26	35640
2	31.03.2019	6065	12	15/26	41990
3	31.03.2020	6551	13	15/26	49129
4	31.03.2021	7075	14	15/26	57141
5	31.03.2022	7641	15	15/26	66120
6	31.03.2023	8252	16	15/26	76170
7	31.03.2024	8912	17	15/26	87405
8	31.03.2025	9625	18	15/26	99950
9	31.03.2026	10395	19	15/26	113943
10	31.03.2027	11226	20	15/26	129535
11	31.03.2028	12125	21	15/26	146893
12	31.03.2029	13094	22	15/26	166199
13	31.03.2030	14142	23	15/26	187654
14	31.03.2031	15273	24	15/26	211478
15	31.03.2032	16495	25	15/26	237913
16	31.03.2033	17815	26	15/26	267224
17	31.03.2034	19240	27	15/26	299701
18	31.03.2035	20779	28	15/26	335666
19	31.03.2036	22442	29	15/26	375466
20	31.03.2037	24237	30	15/26	419486
21	31.03.2038	26176	31	15/26	468147
22	31.03.2039	28270	32	15/26	521908
23	31.03.2040	30532	33	15/26	581275
24	31.03.2041	32974	34	15/26	646800
25	31.03.2042	35612	35	15/26	719090
26	31.03.2043	38461	36	15/26	798806
27	31.03.2044	41538	37	15/26	886675

From above example it is clear that there is a bearing impact of "Annual Increase in Salary and Increasing Service Period" on Gratuity Payable to employee on 31.03.2017 and on his retirement. If we calculate the impact from the above example, Gratuity payable to Mr. Bhanu Pratap on Retirement @ a increased salary of 8% p.a. compounded with his increased service period up to retirement is 8,86,675/- which is 29.55 times the Gratuity Payable to him on 31.03.2017 (i.e. 30,000/-).

It is also understood from the above working that gratuity benefits payable to employees in future years has a bearing Impact of Annual Increase in Salary and Increasing Service Period, hence it is advisable to MNC's, Schools, Private Universities, Private Companies to start an early Investment by creating a Gratuity Trust either by Self Managed or though Insurance Company to mitigate the effect of "Annual Increase in Salary and Increasing Service Period" on Gratuity Payable to employees in future.

If you wish to avail our consultancy services to create a Gratuity Trust Fund, you may call us at 9211637063 for your query.

Tikaram Chaudhary

Group Gratuity Trust Fund Consultant

Email ID - tikaramchaudhary@gmail.com

Mobile Number  - 9211637063

Linkedin Profile - https://www.linkedin.com/in/tikaram-chaudhary-a5727848/

Caclubindia Profile - https://www.caclubindia.com/profile.asp?member_id=1446582