Gratuity not paid

This query is : Resolved 
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This discussion addresses how to account for a gratuity amount disbursed by LIC in 2013-14 but never paid to the employee. The query explores options like adjusting it against current company contributions or refunding it to the company. Refunding the amount to the company would likely result in it being taxable for the employer.

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(Querist)
28 December 2021 A company has insured its liability towards Gratuity with LIC. In the FY 2013-14 LIC had disbursed Gratuity amount for a leaving employee but due to some reason the employer did not pay the sum to the employee & the employee never claimed it again. The Company has also formed a Trust to handle the Gratuity payments. What treatment should be given to this unpaid gratuity amount which is outstanding in the books of the Gratuity Trust of the Employee.
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
28 December 2021 Either adjust in the current year gratuity contribution from the company or refund it to the company.
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CA Ritu Chauhan

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CA Ritu Chauhan (Querist)
29 December 2021 Thank you so much sir. If refunded to the company then it will be taxable in the hands of the company, right ?
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
29 December 2021 Yes you are right.....
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