Gratutity

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Sanjay Grover (Querist)
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16 June 2010 Sir,
whether taking a policy under the payment of gratutity act is mandatory and what is the treatment under AS 15 if company has not created any fund for gatutity liability

Regards
Sanjay Grover

Rasesh

Rasesh (Expert)
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17 June 2010 If a gratuity policy is not taken, then provision has to be made inthe books of accounts.

Sanjay Grover

Sanjay Grover (Querist)
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17 June 2010 Sir,
Please clarify. In this case policy has not been taken but as per actuarial valuation certificate, liability is provided in the books of accounts. suppose further that merely by providing liability , the company will not been able to make the payment unless it has sufficient cash in hand and what will happen if company goes bankrupt. How to protect interest of employees

Rasesh

Rasesh (Expert)
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17 June 2010 For liability of PF and Gratuity, the Directors of the Company are personnally liablie. If you are aware, in the case of Subhiksha (retail chain), the promoter director was required to deposit the amount for PF from his personal funds.

So, making provisions in books of accounts is for showing true and fair veiw of the company's position. In case the company fails in its liability, directors personal liability is invoked.

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