Statutory Compliance
Ensures that employers comply with the Gratuity Act, 1972, which mandates the payment of gratuity to employees who have completed five years of continuous service.
Investment Options
Funds can be invested in various financial instruments, including equity and debt funds, to grow the corpus over time through ULIPs or traditional endowment options.
Tax Benefits
Contributions made by employers are eligible for tax deductions, and gratuity received by employees is tax-free up to specified limits under Section 10(10).
Flexible Premium Payments
Employers can choose to make annual, semi-annual, quarterly, or monthly contributions with renewable policy terms.
Life Cover
Some plans offer bundled life insurance cover for employees, providing additional benefit in case of death during service period.
Expert Fund Management
Professional management of funds ensures optimal returns on contributions with dedicated relationship managers for policy administration.
Gratuity is given by the employer to his/her employee for the services rendered by him during the period of employment. It is usually paid at the time of retirement but can be paid earlier, provided certain conditions are met.
A person is eligible to receive gratuity only if he has completed a minimum of five years of service with an organization. However, it can be paid before the completion of five years at the death of an employee or if he has become disabled due to an accident or disease.
Superannuation
Employee should be eligible for superannuation.
Retirement
Employee gets retired.
Resignation
Employee resigns after working for 5 years or more in an organization.
Death or Disability
Employee dies due to illness, accident or suffers through a disability.
Gratuity Calculation Formula:
Gratuity Amount = (Last drawn Monthly Basic Salary + D.A) × 15 × No. of years of service / 26
Example Calculation:
Monthly Salary: ₹30,000
Years of Service: 10 years
Calculation: (₹30,000 × 15 × 10) / 26 = ₹1,73,077
Group Gratuity Insurance can be considered as a fund which the employer keeps with the insurer, in order to pay their future Gratuity Liability to employees. Under this policy, the fund given to life insurers by the employer is kept invested in the market (Equity or Debt) by insurers after due discussion and employer consent on investment fund options. At any time, the insurer is liable to pay not more than what is available under the fund.
Employer Trust
Employer creates a trust for the administration of the fund under the Gratuity scheme.
Initial Contribution
Initial contribution based on actuarial advice.
Investment Strategy
Discuss investment preferences and strategies with the Insurance Broker and Insurance Company.
Periodic Review
Contribute to the fund and review investment return and fund growth periodically.
Gratuity Liability Notification
Inform the insurance company at regular intervals whenever gratuity liability arises from employees.
Medical Expenses
Some plans may include medical coverage as part of the comprehensive employee benefit package.Disability Benefits
Coverage for disability-related gratuity payments when employees become disabled during service.Death Benefits
Gratuity payments to nominees in case of employee death, even before completing 5 years of service.Ready to Protect Your Business?
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