Gratuity act

Save Share

This query is : Resolved

Prakash (Querist)

15 December 2010 If any company provision of gratuity by accrual method and this amount deposit to own create trust. So my query is, can they give to employee gratuity amount l5 days salary *year of service as per gratuity act 1972 or they have to pay(amount deposit to trust) by accrual provision method as per accounting standard 15 ?

Sunil Kr. Sanganeria

Sunil Kr. Sanganeria (Expert)

15 December 2010 As per the Gratuity Act, an employee is entitled for gratuty only when he cpmpletes 5 years continuous period of service. An employer has to pay gratuity for 15 days for every completed year of service. An employer can pay more but the excess is taxable under Income Tax subject to provisions of Section 10(10)of the Income Tax Act

Prakash

Prakash (Querist)

15 December 2010 thats mean we can make provision accrual benefit method as per accounting standard 15 but we can pay last drawn 15 days salary * lenth of year of service at the time of retirement.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now