Gratuity

What is Gratuity

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 Gratuity is a portion of earnings given by an employer to his or her employee as an appreciation of the good services offered during the working duration at the company. There is a criteria used indetermination of the employee who is most suited to receive the gratuity. The standards include if the employee has served for a duration of at least five years or even more offering continuous service. This is also applicable to individuals who are in the following periods;

  • Superannuation period
  • Retirement period
  • Registration period
  • In case of death or disabilities brought about by either a serious disease or accidents. The 5 years period is not a necessary condition in case of a fatal death or even disablement.
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Under this umbrella the amount that is payable to an individual according to 1972 Act is computed as

  • A person is required to take his or her last month’s wage [basic]. In the case that a person is entitled to dearness allowance, he or she should be given[basic wage + DA]
  • After ward divide the amount you have obtained above by 26 [26 represents the working days in a month]
  • Then multiply the results from above by 15
  • After getting the answer, multiple the solution by the amount of years you have rendered the service. The results obtained here will be your gratitude amount entitlement
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An example:

  1. If you basic salary plus DA is Rs. 26000
  2. You are to divide that amount by 26: 26000/26=1000
  3. Then multiple the answer by 15: 1000 X 15=Rs.15000
  4. If you have worked for 8 years. You are have: 15000 X 8= Rs. 120000. Therefore a person will be entitled to Rs.120000
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There are different circumstances that can easily disrupt the payment understanding of the gratuity. For example an employee has worked for the same employer but at different organization due to many reasons. That person if fully eligible for the payment since both companies are under similar management. The employee ought to have worked for a period of more than 5 years in both companies.

This payment has an advantage since it motivates employees to remain with the same employers for a long period of time without quitting or moving to another organization. The employees are able to offer the best kind of service they can deliver since they know at the end of the working period. They are entitled to a reward. This form of payment is also encouraged since in case of retirement, this gratuity will be added on the pension money therefore, the amount of money a person would have access to in his or her old age will be enough to enable that person live a more comfortable life.

Employees should be able to calculate their own gratuity amount with ease since it’s not a difficult task to carry out. Therefore, a good relationship between an employee and an employer should be established so as to enable an individual to get this kind of payment when he or she leaves an organization. As it is said at the end of the day, patience pays.

Posted in EPF

Pension

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This is a scheme that enables people who are not working therefore, not earning to have a stable income source in India. This amount is usually paid on systematic installments and mostly the group of people that greatly benefit from it are the employees of the government. For one to satisfactorily qualify for the age pension, you are mandated to fulfill the residence and age requirement. Afterward you’re payable age pension amount is computed. There several factors that affect the amount payable under this umbrella such as a person’s income or assets and other situations.

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If a person happens to be legally blind, he or she is eligible to access the Age pension blind fund. This has no regards to either the assets or income tests. All the pension qualification requirements are regarded as internal matters of the Organization Company or even corporations. There are diverse modules of pension classes. Below they are all listed.

  • Voluntary retirement
  • Superannuation
  • Retiring pension
  • Invalid pension
  • Compensation pension
  • Compassionate allowance
  • Retirement compulsory pension
  • Family pension
  • Extraordinary pension
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There are various rules governing the pension. First of all, the most important rule is that for one to qualify for a pension he or she must have worked for at least 20years. Before it was 33 years but later on the number of years was greatly reduced. The second rule is that the pension evaluation is done on the base of the latest 10 months pay average or the pay that was last drawn. The decision is made based on whichever amount is going to be of most benefit to the employee. The various terms that are related to the computation of the pension include communation, pension, death cum gratuity on retirement, family pension and pension restoration.

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The pension received by an individual is taxable regardless of the cradle. The family pension is an exception, in that some amount is exempted from the taxable monies. These include Rs.15000 or 1/3 of the whole pension one receives in the course of a fiscal year. Pensions are advisable for everyone since one is assured of a comfortable life that is struggle free during your old age. One can easily relax and wait for the instalments which he or she can use during for sustenance.

 

A person can also decide to invest some on the pension money on various assets that can easily and quickly generate the needed profitable returns. This is a wise way of spending your pension money, however, you need to be really careful on the type of investment. One should be able to calculate their pension tax, which they are required to pay.

 

Nevertheless, one is advised to consult a professional auditor who is an expert on tax matters. They will be able to correctly and accurately compute the tax amount.

Pensions have numerous advantages in that people are able to have a stable assured comfortable future, this prevents  old people from being dependent on the young people for care taking. This aspect is important in boosting of economic growth since the young are able to put all their energy in working to grow the country.

Posted in EPF

Provident Fund

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Some of you might be wondering what a provident fund is. The answer is quite simple. It is a compulsory, tax certified contribution that is defined by a retirement subsidy plan which requires monthly equal input at a 12% rate of the basic salary paid to an employee by an employer.

Under the administration of the fund there are two scenarios. In that in the case of an establishment which is unexempted, the regional commissioner of the provident fund is in charge if its administration and management. In the case of excluded trust and exempt trusts the trustees board is responsible for the proper administration of the fund. When the provident amount is contributed by an employer in place of his or her employee. The 12% of the basic salary cut, 8.33% of it goes directly to the pension scheme of the employee.

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Below is the procedure to be used during the EPF transfer or the EPF withdrawal of the required amount which is under the fund

  1. For do be able to withdraw the provided fund, you are required to submit the needed EPF Claim form 19.
  2. For the withdrawal of EPS,you are required to submit the needed for 10C
  3. For the transfer of the provident fund from your previous employer to your current one, you are required to submit the needed form 13.
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There is a difference between an employee’s contribution to the fund and an employer’s input to the fund. This occurs in that the employees input of is12% of the basic wage, D A and the monies worth of the food allowance is applicable while the employers input is 12% of the basic wage,DA and also the monies worth of the food allowance if applicable. Out of the 12 % under the employers umbrella 8.33% goes directly to the EPS account. The remaining percentage goes to the employees account of the provident fund. Apart from allocated PF input contributions, the employer is responsible for the admin charges which are 10% of the basic charges of administration, 5% of the basic insurance charge of the developed employee link.

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It is mandatory for the employees to make necessary contributions to the fund if their employers are covered under the Act of the provident fund. If the fund is withdrawn within the first 5 years since the contribution to the fund started. The accumulated sum of money is liable to taxation. Hence,an individual is required to make payment on the accumulation according to the tax slab.

A person is allowed to take a loan using the PF investment contribution as a security. They are only needed to fulfil the other required conditions of the Act. A person is also allowed to withdraw their contributions from the fund, provided they are able to meet the statuses put in place. If an employee wishes to contribute more than the required amount to the fund, he or she is allowed to do so, the individual isrequisite to give his or her employer the go ahead consent. There is no limit on the additional contribution.

Posted in EPF