What is the maximum limit of Gratuity Payable under the Payment of Gratuity Act, 1972?

  • Rs.3 lakh
  • Rs.7.50 lakh       
  • Rs.10 lakh          
  • Rs.10.50 lakh
Monis Rasool Professor Asked on 28th April 2015 in Finance.
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    Rs.10 Lakh

    The maximum limit of gratuity which payable under the payment of gratuity Act 1972 has been raised to Rs.10 lakhs w.e.f 1-1-2006. Gratuity is also called a tip. Gratuity Act is applicable to all establishments, where number of employees are 10 or more in any day of the last 12 months. It includes both commercial and non commercial establishment like educational institutes etc, and Charitable institutes and hospital are also covered under the act.

    The Payment of Gratuity Act 1972 is applicable to the

    • Every factory, mine, oilfield, plantation, port and railway company
    • Every Shop or establishment within the meaning of any law in which ten or more persons are employed, on any day of the preceding twelve months;
    • Such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification specify in this behalf.

    Gratuity Calculation
    [(Basic pay + Dearness allowance) x 15 days x No. of years of service]/26

    15 meant for half month salary
    26 meant for month days (after leaving and w/offs)

    Monis Rasool Professor Answered on 2nd May 2015.
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