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1) If the Company is deducting the amount of Gratuity from monthly CTC of the employees then what will be the accounting treatment of the same?

2) Does the company needs to transfer/invest the deducted amount to Gratuity Fund or Gratuity Insurance premium?

3)Company can just deduct the amount and does not show in Books of Accounts?

4) Company creates the provision for gratuity at the time of closing of books on the basis of number of employees and their completed job period ?

From India, Ahmedabad

Processing Pay roll from monthly CTC is not the right process. It should be from Monthly gross, CTC has no legal stand. Monthly gross usually consists of Basic, DA (IF ANY ), HRA, OTHER ALLOWANCES PAID ON MONTHLY BASIS.

Gratuity may be the part of CTC and there is no harm. If in Monthly CTC Structure Gratuity is shown at earning side, then it should be shown in deducting side also as it is not one item payable on monthly basis.

The deducted Gratuity amount either to be kept in Gratuity fund maintained by the organization or to be deposited with insurance if there is agreement with insurance.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531

USD HR Solutions – To Strive towards excellence with effort and integrity

From India, New Delhi
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