No Tags Found!

pravinkjoshi
2

Hi , can anyone please tel me, How the gratuity is insured by LIC & Paid by LIC IS it mandatory? Pravin Joshi
From India, Pune
hemantsailor
2

hi

here is Gratuity Scheme of LIC from site <link no longer exists - removed>

see this site for more information,

Under the Payment of Gratuity Act, 1972, it is employers statutory liability to pay 15 days salary (15/26 of a month's wages) for every completed years service to each of his employees on their exit, for any reason after five years of continuous service, subject to maximum limit of 3.5 lacs. Higher benefits can be paid if the employer so desires. Gratuity payable to the employees can be paid as and when liability arises and can be claimed as deductable expense under P & L A/c of the relevant financial years. However, the sound system of financial management envisages providing for Gratuity liability every year and claiming the tax benefits as it is mandatory as per Accounting Standards 15 (AS15) to account for the liability on Actual basis. This can be done by creating a Trust, managed privately or by LIC and paying the amount to the Trust every year. In case of Privately Managed Trust, investment of funds will have to be done as per Income-Tax Act, by the trustees and entire administration of the Trust including Actuarial Valuation will be the responsibility of the Trustees. In case of LIC managed trust, the job of investment and actuarial valuation is taken over by the corporation free of charge and in addition, interest is paid by the Corporation on the accumulated funds.

LIC give below 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:

ATTRACTIVE RETURN:

LIC offers a very attractive rate of interest depending upon the size of the fund

Employers ordinary annual contribution is allowed as deduction in full in computation of business income as per Section 36(1) (v).

Employer's initial contribution.

No. limit on amount as per Rule 104.

It is to be paid on the date of setting up of fund in full or in 5 yearly equated instalments from such date.

Deduction to be allowed shall not exceed 8 1/3% of the past salaries as per Rule 104.

Allowed as a deduction in full in computation of business income as per Section 36 (1)(v).

Benefits to employees Employer's initial and ordinary annual contribution are not treated as taxable perquisites.

Gratuity is payable in lumpsum only as per Rule 3 of part C of Schedule IV.

Gratuity is salary and hence taxable, it is taxed under Sec. 17(i) (iii).

Gratuity is tax free upto half month's average salary (of last 10 months) for each year of service, subject to a maximum of Rs. 3.5 lakhs as per Sec. 10(10).

While computing tax on gratuity, relief of spreading back available as per Sec. 89(1).

Multi-Employer group are not allowed as per CBDT letter addressed to LIC.

The above scheme, attractive as it is, can be made a part of overall commitment of any progressive employer wedded to Human Resource Development concept.

regards

hemant sailor

From India, New Delhi
nasirali
Dear Pravin
Payment of gratuity for the eligible (those wo have completed continuous)5years) candidate is mandatory.But payment of Bonus Act 1972 never insists that it should be through LIC.
Sec. 4 A enbales an employer to obtain an insurance in the manner presecribed ,for his laiablity for payment towards the under the Act from the Life Insurance Coprporation of India esatablished under the Life Insurance Coprporation of India Act 1956 or any other prescribed insurer.
nasir ali

From India, Thiruvananthapuram
singh.neetu
is it necessory to run a trust if you wish to mantain and gratuity fund by lic hi please reply Reagards, Shishpal
From India, Noida
clintdsouza@gmail.com
Multi-Employer group are not allowed as per CBDT letter addressed to LIC. Can anyone share the copy of the CBDT letter?
From India, Mumbai
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.





Contact Us Privacy Policy Disclaimer Terms Of Service

All rights reserved @ 2024 CiteHR ®

All Copyright And Trademarks in Posts Held By Respective Owners.