Which industries fall under the gratuity act - is it applicable to software IT?

1) which industries fall under the gratuity act - is it applicable to software IT , and telecom , Media, publishing company also .
2) in a company which is more 5 yrs old , and some employees who have completed 5 yrs of service there , but they dont have gratuity mentioned in their CTC or anywhere , does the company still become liable to pay gratuity for the last 5 yrs served . if so how is it calculated and paid
3) is it taxable
4) what is the best time to pay it off ...
5) what percentage is gratuity calculated ?

1) which industries fall under the gratuity act - is it applicable to software IT , and telecom , Media, publishing company also .

It is applicable to all industries. IT Software Media Publishing companies all come under this category.

2) in a company which is more 5 yrs old , and some employees who have completed 5 yrs of service there , but they dont have gratuity mentioned in their CTC or anywhere , does the company still become liable to pay gratuity for the last 5 yrs served . if so how is it calculated and paid

All employees are covered. There is no need to mention in the letter. It is a statuory requirement. The payment shall be made within 30 days of quiting/retiring from the company. It includes terminationand death as well. The minimum period of 5 years is not applicable in case of death.

Formula: Last Drawn Basic+DA*15*Number of years of completed years

of service/26

3) is it taxable

Maximum ceiling is 3.50 lakhs

4) what is the best time to pay it off ...

It need to be paid only after an employee resigns/retires/or terminated.It is not paid while in service

5) what percentage is gratuity calculated ?

It is worked out at 4.1 percentage for calculating CTC.

Siva

Accounting & Disclosure for Employee Benefits

in Compliance of Accounting Standard (AS) 15 (revised 2005)

---------------------------------

Accounting Standard (AS) 15 (revised 2005) is issued by the Institute of Chartered Accountants of India and is mandatory in nature (refer to the text of the standard for details).

The objective of the standard is to prescribed accounting and disclosure for employee benefits. The statement requires an enterprise to recognize:-

A liability when an employee has provided service in exchange for employee benefits to be paid in the future; and

An expense when the enterprise consumes the economic benefit arising from service provided by an employee in exchange for employee benefits.

Employee Benefits fall under 2 type of plans:- Defined Contribution Plans and Defined Benefit Plans.

Employee Benefits are further classified as:-

Short Term Employee Benefits

Post Employment Benefits such as Gratuity, Pension, Other Retirement Benefits, Post-Employment Life Insurance and Post-Employment Medial Care;

Other Long-Term Employee Benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, if they are not payable wholly within twelve months after the end of the period, profit-sharing, bonuses and deferred compensation; and

Termination Benefits

Because each category identified above has different characteristics, this statement establishes separate requirements for each category.

Accounting and Disclosure requirements for Defined Benefit Plans need the skill of an Actuary.

Most common Defined Benefits relevant in the Indian context which need the services of an actuary for compliance of the accounting standard, whilst finalizing the financial statements are:-

Gratuity

Compensated Absences (Earned Leave)

Compensated Absences (Sick Leave)

Post Retirement Medical Benefits

Superannuation (Pension Benefits)

Frequent items to be conversant with the subject are:-

Projected Unit Credit Method (PUC)

Present Value of Obligation

Current Service Cost

Interest Cost

Actuarial Gains/Losses

Employer’s Expense

Experience Adjustment on Plan Liabilities

Experience Adjustment on Plan Assets

*We provide actuarial services for compliance of the standard. We have expertise, experience and in-depth knowledge in this field. We have a large clientele spread in almost all sectors of the economy in Public and Private Sectors including Multinational Companies, Limited Companies, Schools, Hospitals, Banks, Electricity/Power Companies etc. etc.

Our services are also available for compliance of :-

International Accounting Standard IAS (19) - IFRS

Under US GAAP

For more details log on to www.consulitngactuarymlsodhi.blogspot.com

Dear Sir,



The write given below may help you to understand the requirement of actuarial valuation services in compliance of AS-15 (Revised 2005) under various employee benefits plans such as Gratuity, Leave Encashment , Pension, etc. :-





Accounting & Disclosure for Employee Benefits in Compliance of Accounting Standard (AS) 15 (revised 2005)

--------------------------------

Accounting Standard (AS) 15 (revised 2005) is issued by the Institute of Chartered Accountants of India and is mandatory in nature (refer to the text of the standard for details).

The objective of the standard is to prescribed accounting and disclosure for employee benefits. The statement requires an enterprise to recognize:-

A liability when an employee has provided service in exchange for employee benefits to be paid in the future; and

An expense when the enterprise consumes the economic benefit arising from service provided by an employee in exchange for employee benefits.

Employee Benefits fall under 2 type of plans:- Defined Contribution Plans and Defined Benefit Plans.

Employee Benefits are further classified as:-

Short Term Employee Benefits

Post Employment Benefits such as Gratuity, Pension, Other Retirement Benefits, Post-Employment Life Insurance and Post-Employment Medial Care;

Other Long-Term Employee Benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, if they are not payable wholly within twelve months after the end of the period, profit-sharing, bonuses and deferred compensation; and

Termination Benefits

Because each category identified above has different characteristics, this statement establishes separate requirements for each category.

Accounting and Disclosure requirements for Defined Benefit Plans need the skill of an Actuary.

Most common Defined Benefits relevant in the Indian context which need the services of an actuary for compliance of the accounting standard, whilst finalizing the financial statements are:-

Gratuity

Compensated Absences (Earned Leave)

Compensated Absences (Sick Leave)

Post Retirement Medical Benefits

Superannuation (Pension Benefits)

Frequent items to be conversant with the subject are:-

Projected Unit Credit Method (PUC)

Present Value of Obligation

Current Service Cost

Interest Cost

Actuarial Gains/Losses

Employer’s Expense

Experience Adjustment on Plan Liabilities

Experience Adjustment on Plan Assets

*We provide actuarial services for compliance of the standard. We have expertise, experience and in-depth knowledge in this field. We have a large clientele spread in almost all sectors of the economy in Public and Private Sectors including Multinational Companies, Limited Companies, Schools, Hospitals, Banks, Electricity/Power Companies etc. etc.

Our services are also available for compliance of :-

International Accounting Standard IAS (19) – IFRS, NAS-14 (Nepal Accounting Standard)

Under US GAAP



For more details you may visit our website www dot mlsodhiactuary dot com

Dear Seniors,
In some organizations, the gratuity is being deducted on monthly basis from the employees' salary.
if the employee resigns or is terminated before completing five years will the deducted amount (gratuity contribution) be settled to the employee or not?
Please explain.
R.Srinivasan