Accounting of Gratuity Trust


16 August 2010

Pls advise on following case:
Background of Case:
X Company Pvt Ltd has a gratuity trust with their 3 employees as Trustee. Trust is register with CIT.
X co directly pays premium to LIC towards gratuity as per Actuarial valuation from LIC and debit it to P&L account.
X co make provision for gratuity liability as per actuarial valuation received from LIC.
On leaving of employee the Trust get the gratuity amount (say 100) from LIC and pay (say Rs.98) to respective employee.
Accounting treatment given by company is correct?
Premium paid by X company to LIC towards gratuity can be shown as fund with LIC in the books of Trust?
Whether Trust is required to file IT return?
Below computation of income is correct?
Amount received for the purpose of Trust :100
Less: Set part 15% 15
Balance 85
Applied for purpose of trust 98
Loss to be carried forward (7)

31 August 2011

Hi Amol,

I am also facing similar problem with one of my client. Please let me know if you have got any solution.Thanks

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