21 January 2024
Ours is pvt ltd co. we have formed separate group gratuity trust and it was approved by Income tax department. The Gratuity Trust has invested the money with LIC Group Gratuity Scheme.
1. We are making provision for Gratuity liability as actuarial report (as per INDAS) in the books of company and shown on liability side under provision. 2. Whatever amount we pay to LIC is shown under assets side as Gratuity Fund with LIC and every year what ever we pay is getting added in the balance and claim deduction for what ever amount is paid to LIC.
Just now we are passing only 2 entries in the company's books 1 - Provision of Gratuity as per actuarial Report Gratuity a/c Dr. (profit & loss) To Provision for Gratuity (Liability Side)
2 - For amount paid to LIC for Group gratuity scheme. Gratuity Fund (LIC) Dr. (Assets side) To Bank Account
my question 3. Whatever Interest we received from LIC is shown as income in gratuity Trust. & Trust is having separate PAN No. and we also file Trust Income Tax Return. - so shall we also show that Interest income in Company's profit & Loss account ? if yes how -i.e. what entry should be passed -say interest shown as income in p&l but dr. to what ?
4. when ever employee left the job and having completed 5 years - LIC pay Gratuity Directly to Group Gratuity Trust account and from trust account it is directly paid to employees.
Do we also have to show Gratuity paid to employees in company's books of account if yes what will be the entry ? i.e. which account will be debited and which account will be credited ?
highly appreciate if some one help to solve our query. Thanks in Advance.
CAclubindia
