Gratuity

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Querist : Anonymous

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Querist : Anonymous (Querist)
24 April 2015 Hello everyone,

My company has chosen to make payment for gratuity out of his own funds and as per AS 15 we make a provision for the accruing liability, but as per Section 40A(7) disallows provision for gratuity as an expense. Now my query is which a/c will be debited when we will make any payment of Gratuity to any employee.

24 April 2015 Keep two accounts one gratuity provision a/c and another gratuity payment a/c so that payment a/c will be allowed for tax computation.

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Querist : Anonymous

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Querist : Anonymous (Querist)
27 April 2015 Thank u sir, but what about the provision account I mean how we will adjust that account?

27 April 2015 Every year you have to do actuarial valuation based on which either you make additional provision or withdraw provision.


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