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Gratuity is a way an employer appreciates an employee's loyalty and service to the company. It is a lump sum amount paid out to the employee, upon his termination of employment, by the employer. The Government of India introduced the Payment of Gratuity Act, 1972, making it mandatory for all employers with more than 10 employees, to offer gratuity.
The gratuity liability for the employers increases on an annual basis, with an increase in the employee's salary and tenure at work. BSLI helps meet this liability with its CAT, Group Init Linked Plan (GULP) and Guaranteed Interest Credit (GIC) and GVPP.
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Group Value Plus Plan (GVPP)
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Key Features: |
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Multiple Plan Options
You have a choice of five plan options A, B, C, D and E that enable you to select suitable plan fulfilling your specific needs. |
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Manage Multiple or Single account for each scheme/member
You may specify the number of accounts you want to maintain. Your premium will be invested account wise and fund value will be tracked for each account separately. Your policy can be managed with multiple accounts as well as different fund allocation to suit each account. Additionally, you have the freedom to open new accounts at any time by paying fresh premium specified at the time of payment. |
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Flexible premium anytime
You have the convenience to pay the premium in one or more installments. Also, you may pay premium at any point of time |
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Customised investment portfolio as per changing needs
You have a choice of market cycle or self managed options to manage your investment portfolio.
In the Self Managed option, you have the freedom to decide how to invest your premiums. We offer eleven investment fund options to suit your specific needs. Under the MarketCycle Option, your portfolio will be structured as per your risk profile – you can decide whether you are Aggressive, Moderate, Conservative or Assure in your approach towards investments. Your portfolio will then be monitored and administered by us, saving you the time and effort involved in overseeing it yourself.
You can change the risk profile anytime that too free of charge. The rebalancing of the MarketCycle Option is also free of charge.
You also can switch from Self Managed Option to MarketCycle Option or vice versa at any time. |
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INVESTMENT FUND OPTIONS
The portfolio of the different Investment Fund Options is given below:
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Investment Fund |
Risk Profile |
Asset Allocation |
Min. |
Max. |
Group Money Market |
Very Low |
Debt Instruments, Money Market & Cash
Equities & Equity Related Securities |
100%
0% |
100%
0% |
Group Short Term Debt |
Very Low |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
100%
0% |
100%
0% |
Group Gilt |
Low |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
100%
0% |
100%
0% |
Group Fixed Interest |
Low |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
100%
0% |
100%
0% |
Group Income Advantage |
Low |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
100%
0% |
100%
0% |
Group Bond |
Medium |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
100%
0% |
100%
0% |
Group Secure |
Medium |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
80%
10% |
90%
20% |
Group Stable |
High |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
65%
20% |
80%
35% |
Group Growth |
High |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
50%
30% |
70%
50% |
Group Growth Advantage |
High |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
40%
30% |
70%
60% |
Group Growth Maximiser |
High |
Debt Instruments, Money Market and Cash
Equities & Equity Related Securities |
0%
80% |
20%
100% |
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How Gratuity works |
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As per the Payment of Gratuity Act, 1972, an employer makes annual contributions based on salary, for each completed year of service of the employee towards gratuity. The lump sum accumulated is payable on death of the employee during his tenure of service or if the employee retires/resigns after completing at least 5 years of continuous service with the employer.
Gratuity is calculated as the last drawn salary (basic plus dearness) multiplied by 15, multiplied by the number of years in service, divided by 26. The number of years is rounded off for every 6 months i.e. if the employee has worked for 7 years and 5 months, only 7 years will be considered for gratuity. |
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Regulations |
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Eligibility Condition and Contribution |
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- All companies employing 10 or more employees are liable to pay gratuity.
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- All employees that complete 5 years of continuous service are eligible for gratuity. The only exception is in case of the employee's death, after which the gratuity is paid to the nominee or heir.
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- The annual contribution of an employer should not exceed 8.33 per cent of the employee's salary.
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- There are four instances when an employee receives gratuity. These are:
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- On early retirement due to ill heath
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Benefits |
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For Employees |
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- The gratuity payable to an employee is 15 days wages (basic plus dearness allowance) for year that he/she completes or part of a year in excess of 6 months. This is subject to a maximum of Rs 3.5 lakh.
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- Death benefits in the form of future service gratuity, which is paid for the anticipated salary based on the last drawn salary of the employee.
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Tax Treatment |
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For Employers |
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- The annual contribution by the employer, subject to a maximum of 8.33 per cent of the annual wage bill of the employee, is a deductible business expense under section 36 (i) v of the Income Tax Act 1961.
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- The income on investment is exempt from tax under section 10(25) (iv) of the Income Tax Act, 1961
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For the Employee |
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The gratuity received by an employee, covered by the Payment of Gratuity Act 1972, is tax free subject to the least of the following amounts: |
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- 15 days salary, based on salary last drawn for every completed year of service (or part thereof in excess of 6 months)
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- Gratuity actually received
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Death benefits received by the employee's nominee are tax free. |
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Disclaimer
This policy is underwritten by Birla Sun Life Insurance Company Limited (BSLI). This is a non-participating unit linked plan. Birla Sun Life Insurance - BSLI Group Value Plus Plan - are only the names of the Company, Policy and Investment Options and do not in any way indicate their quality, future prospects or returns. The names of the funds offered in this plan do not in any way indicate their quality, future prospects or returns. The charges are guaranteed throughout the term of the policy unless specifically mentioned and subject to IRDA approval. The value of the investment fund reflects the value of the underlying investments. These investments are subject to market risks and change in fundamentals such as tax rates etc affecting the investment portfolio. The premium paid in unit linked life insurance policies are subject to investment risk associated with capital markets and the unit price of the units may go up or down based on the performance of investment fund and factors influencing the capital market and the policyholder is responsible for his/her decisions. There is no guarantee or assurance of returns from the investment funds. BSLI reserves the right to recover levies such as the service tax levied by the authorities on insurance transactions. If there be any additional levies, they too will be recovered from you. This brochure contains the salient features of the plan. For further details please refer to the policy contract. Tax benefits are subject to changes in the tax laws. Insurance is the subject matter of solicitation. For more details and clarification visit our website.
Unique No. 109L055V02 ADV/6/11-12/4652 Ver2/Mar/2012
Unique No. 109L055V02
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