ACCOUNTING ENTRIES FOR GRATUITY

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The discussion explained accounting entries for gratuity transactions involving LIC. Entries covered gratuity premium payment to LIC, receipt of gratuity amount from LIC, and payment to employees, along with suggestions for maintaining a separate gratuity bank account.

Querist : Anonymous

Querist : Anonymous (Querist)

20 January 2011 What are the accounting entries to be made for gratuity in the following cases :-

1.When the employer makes payment to LIC linked gratuity.

2.When the gratuity amount is received [from LIC] in the name of the company .

3.When the payment is made to the employee.

Thanks & regards,

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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20 January 2011 ****************************

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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20 January 2011 1> Gratuity fund Dr.
To LIC Cr
LIC Dr.
To Bank Cr.
2 > Bank Dr.
To Gratuity Fund Cr.

3> Gratuity Dr.
To Bank cr.

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CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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20 January 2011 In case of Gratuity preimum is paid to LIC , it is treated expenses
i.e entry will be made
Gratutiy A/c Dr
to Bank

Now when gratuity is received from LIC for a person who left
Then entry will be passed
Bank A/c Dr.
to Gratuity Fund A/c

When grautity is paid to employee by the company which is received from LIC
then
Gratuity Fund A/c
To Bank
(Cheque is issue in the name of employee)

In this case it is better to open a new bank account for Gratuity. In which Grautuity recd from LIC and Grauity paid to employee transction is to be dealt only.

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Nitin H

Nitin H (Expert)
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07 August 2022 For any assistance required with respect to Gratuity trust, superannuation trusts or any employee benefit schemes, do connect on below mentioned email id a1consultancyservices@yahoo.com. We are a 9 year old firm entrusted by many indian and multi national companies, we are specializing in the field of corporate employee benefits.

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