Gratuity Valuation Help: How Do I Calculate Past Service Liability for 400 Employees?

Hello Friends,

I have just started working on Gratuity valuation and would like to understand how to calculate Past Service liability and future service contribution for 400 employees. I have data such as salary escalation, discount rate, age, date of joining, etc.

The easy way out is to go for a group gratuity policy of LIC. Anyway, making provision for gratuity liability is an accounting function.

Hi Shirkant,

I am looking for guidance on gratuity valuation calculation. Specifically, I am trying to determine the Past Service liability and future service contribution. If you could assist me with this, I would greatly appreciate it.

Thank you.

In an Excel sheet, fill in the data under the following fields: name, date of joining (DOJ), years of service, rate of last basic+DA, and gratuity amount. The gratuity liability on the date can be calculated using the information provided above. At the end of every month, you will be able to view your liability.