Jaikishan
(CA)
(168 Points)
Replied 14 September 2014
Under section 36(1)(v) of the Act, any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by him for the benefit of his employees under an irrevocable trust is allowable as a deduction in the computation of income from business/profession. For obtaining the approval, the employer should comply with the requirements laid down in Part C of the Fourth Schedule to the Act, as well as the requirements laid down in rules 98 to 111 of the Income-tax Rules.
The contents of the rules vis-a-vis Part C of Fourth Schedule
98.2 The aspects in respect of which mention is made in Part C of the Fourth Schedule, but detailed requirements are laid down in the rules, are tabulated below:
|
Rule No. in Part C of Fourth Sch. |
Requirements laid down |
Rule No. in IT Rules |
|
3 |
For receiving and retaining approval, the fund should, in addition to the conditions in rule 3, satisfy other conditions which the Board may, by rules, prescribe |
99, 100, 102 |
|
8(2) |
Appeal by employer should be in such form and shall be verified in such manner and shall be subject to the payment of prescribed fee |
111 |
|
9(1)(a) |
Board may make rules, prescribing the statements etc. which should accompany the application for approval |
109 |
|
9(1)(b) |
Board may make rules, limiting the contributions of an employer |
103, 104 |
|
9(1)(bb) |
Board may make rules, regulating investment of fund moneys |
101 |
|
9(1)(c) |
Board may make rules, providing for penalty for assignment or creation of charge by the employee upon his beneficial interest in the fund |
105 |
|
9(1)(d) |
Board may make rules, providing for the withdrawal of approval to the fund |
—- |
|
9(1)(e) |
Board may make rules, providing for the general purposes, etc. |
101A, 106, 107, 108 |
NIKHITHA
(Student)
(133 Points)
Replied 21 September 2014
Jaikishan
(CA)
(168 Points)
Replied 21 September 2014
NIKHITHA
(Student)
(133 Points)
Replied 21 September 2014
Jaikishan
(CA)
(168 Points)
Replied 21 September 2014
As per Section 4A Payment of Gratuity Act contribution towards LIC for gratuity is mandatory to whom payment of gratuity act applies. Also employer gets benefit under Section 36 1(v) for income tax deductions.
So Contribution towars LIC is contribution towards approved gratuity fund only.
LIC give the details as to how the Group Gratuity (Cash Accumulation) Scheme provides for a convenient mode of funding the statutory obligation of an employer under the payment of Gratuity Act.
NIKHITHA
(Student)
(133 Points)
Replied 21 September 2014
Jaikishan
(CA)
(168 Points)
Replied 21 September 2014
As Explained above Since the insurance is mandatory as per payment of Gratuity Act and also employer takes insurance for which he gets the deduction benefit. Hence insurance is taken for complying the provisions of Gratuity Act and getting deduction under Income tax Act. If he doesn't take he will be entitled to get Gratuity benefit. He will get the benefit only when the amount is paid to the employees.
Jaikishan
(CA)
(168 Points)
Replied 21 September 2014
GST Live Certification Course (39th Batch) - April 2024 (Weekend Batch) (With Certificate)
"Live class on Python for Financial Analysis: Unlocking Efficiency in Accounting and Finance"
CAclubindia
