Group Gratuity Plan is a special way to reward your employees loyalty. Having a group gratuity plan enables you to meet your legal obligations of providing gratuity in a hassle free manner. It not only helps you build a healthy corpus, but also offers additional insurance cover, to provide enhanced gratuity benefits in the event of unfortunate death of your employee. This can be done in a tax efficient and hassle free manner through this plan.
Under the Payment of Gratuity Act, 1972, it is an employers statutory liability to pay 15 days salary (15/26 of a months wages) for every completed year of service to the employees on their exit, for any reason after five years of continuous service, subject to maximum limit of 3.5 lacs. Higher benefits can be paid if the employer so desires.
However, the modern system of Financial Management envisages keeping the Liability off the balance sheet of the company. This can be done by creating a Trust, managed privately or by an insurance company and paying the amount to the Trust every year. In case of Privately Managed Trust, investment of funds will have to be done as per Income-Tax Act, by the trustees and entire administration of the Trust including Actuarial Valuation will be the responsibility of the Trustees. In case of insurance company managed trust, the job of investment and actuarial valuation is taken over by the insurance company free of charge and in addition, the higher returns from professional management of the funds.
Employers annual contribution is allowed as deduction in full in computation of business income. Gratuity is tax free upto half months average salary for each year of service, subject to a maximum of Rs. 3.5 lakhs.
Benefits :
for you
- It is a hassle free process and reduces your administrative work.
- Better returns of being part of the insurers investment portfolio.
Group Gratuity Plan is a special way to reward your employees loyalty. Having a group gratuity plan enables you to meet your legal obligations of providing gratuity in a hassle free manner. It not only helps you build a healthy corpus, but also offers additional insurance cover, to provide enhanced gratuity benefits in the event of unfortunate death of your employee. This can be done in a tax efficient and hassle free manner through this plan.
Under the Payment of Gratuity Act, 1972, it is an employers statutory liability to pay 15 days salary (15/26 of a months wages) for every completed year of service to the employees on their exit, for any reason after five years of continuous service, subject to maximum limit of 3.5 lacs. Higher benefits can be paid if the employer so desires.
However, the modern system of Financial Management envisages keeping the Liability off the balance sheet of the company. This can be done by creating a Trust, managed privately or by an insurance company and paying the amount to the Trust every year. In case of Privately Managed Trust, investment of funds will have to be done as per Income-Tax Act, by the trustees and entire administration of the Trust including Actuarial Valuation will be the responsibility of the Trustees. In case of insurance company managed trust, the job of investment and actuarial valuation is taken over by the insurance company free of charge and in addition, the higher returns from professional management of the funds.
Employers annual contribution is allowed as deduction in full in computation of business income. Gratuity is tax free upto half months average salary for each year of service, subject to a maximum of Rs. 3.5 lakhs.
Benefits :
for you
For employees
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