Tika Ram Chaudhary
Gratuity Trust Fund Consultant
(Corporate Consultant with more than 15 Years of Experience in Providing Consultancy Services to Indian Public, Private and MNC’s for Formation of Registered & Approved Gratuity Trust in Terms of Part C of Schedule IV of Income Tax Act, 1961 & Related Matters. We also provide Specialized Support Services to Companies for preparation of Actuarial Inputs required for Employee Benefits Actuarial Valuations for compliance of AS 15 (Revised 2005), IndAS19, IAS 19 (Revised 2011) & US GAAP)
Office Address - R-11, First Floor, Vikas Nagar, Uttam Nagar, New Delhi - 110059 (India)
Mobile No.: 9211637063
Website: www.gratuitytrustfund.com
E-mail: tikaramchaudhary@gratuitytrustfund.com
Background
The Payment of Gratuity Act, 1972 is applicable to
all establishments (i.e. MNC's, Private Schools, Private Colleges, Private
Universities, NGO's, Autonomous Bodies and Other business entities) having more
than 10 employees.
Gratuity is a statutory right of employee whoever
completes 5 years in the same Establishment and is a terminal benefit, it means
gratuity amount will be determined when the monthly terminal wages of the
employee are known to Establishment.
The cost is to be borne by the Employer and not by the Employee hence it can neither be shown as deduction
from employees salary nor as a Part of CTC of employee.
Gratuity shall be payable to an employee on the
termination of his employment after he has rendered continuous service for not
less than five years,-
(a) on his
superannuation, or
(b) on his
retirement or resignation,
(c) on his
death or disablement due to accident or disease
Provided that the completion of continuous service
of five years shall not be necessary where the termination of the employment of
any employee is due to death or disablement
As per Payment of Gratuity
Act, 1972, all companies with 10 or more employees are required to make the
payment of Gratuity within 30 days from the date of exit of employee (Refer
Section 7 of the Payment of Gratuity Act, 1972).
For making the payment of Gratuity to employees, the company has to make the provision of Gratuity benefits based on an Actuarial Report in compliance of AS 15 (revised 2005)/ IndAS19 and create a Gratuity Trust for getting an Approved Gratuity Fund under Irrevocable system.
The companies operating in
following 3 states are mandatorily required to get Compulsory Insurance as per
provisions of Section 4A of The Payment of Gratuity Act, 1972 apart from Provision of Gratuity Liability in Balance Sheet as per Actuarial Report in compliance of AS 15 (Revised 2005)/IndAS19 :-
2. Telangana
3. Karnataka
For the companies doing business in the other states are required to make the provision of gratuity in their Balance Sheet on the basis of Actuarial Valuation in compliance of AS 15 (Revised 2005)/IndAS 19, so that they can make the payment of gratuity from their own resources and comply with The Payment of Gratuity Act, 1972.
In absence of above or non compliance of the payment of gratuity act, 1972, penalties are imposed on the company as per provisions of Section 9 of the Payment of Gratuity Act, 1972. The extract of the same is produced below:-
Section: 9 Penalties.
(1) Whoever, for the purpose of avoiding any payment to be made by himself under this Act or of enabling any other person to avoid such payment, knowingly makes or causes to be made any false statement or false representation shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees or with both.
(2) An employer who contravenes, or makes default in complying with, any of the provisions of this Act or any rule or order made there under shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to one year, or with fine which shall not be less than ten thousand rupees but which may extend to twenty thousand rupees, or with both:
Provided that where the offence relates to non-payment of any gratuity payable under this Act, the employer shall be punishable with imprisonment for a term which shall not be less than [36] [Six months but which may extend to two years] unless the court trying the offence, for reasons to be recorded by it in writing, is of opinion that a lesser term of imprisonment or the imposition 01; a fine would meet the ends of justice.
Compliance of the AS 15 (Revised 2005)/IndAS 19 for Accounting of Gratuity Benefits
At the end of each financial year, All Companies with 10 or more employees are required to prepare Balance Sheet in compliance of Section 128, 129 & 133 of The Companies Act, 2013 and required to comply with the provisions of Accounting Standard 15 (Revised 2005) /IndAS 19 for Accounting of Gratuity Benefits . The following inputs needs to be prepared by you for preparation of Actuarial Valuation Reports:
b. Assumptions (i.e. Financial and Demographic Assumptions).
c. Plan Provision for Gratuity Plan as per company policy, different Sections of "The Payment Gratuity Act 1972" & Labor Laws.
d. Details about Qualifying Insurance Policy or Fair Value of Plan Assets, If applicable (Refer Para 100,101 104 & 105 of AS15 (R 2005))
In case of Compulsory Gratuity Insurance, companies are require the following :-
Our Firm Gratuity Trust Fund Consultant - GTFC is a Leading Corporate Consulting Firm providing Actuarial Valuations and Gratuity Trust Solutions for Management of Employee Benefit (i.e. Gratuity, Leave Encashment, Pension, PRMB etc.) compliances to Schools, NGOs, Autonomous Bodies of Different Ministries of Indian Government, Indian Public, Private and Multinational Companies with employee strength more than 10. From last 15 years, our firm is actively involved in providing End to End Consultation for: -
Gratuity Fund Solutions - The Payment of Gratuity Act, 1972 is applicable to all establishments (i.e. MNC’s, Schools, Private Colleges, Autonomous Bodies under Different Ministries, NGOs and Other Private Business entities) having more than 10 employees. For the purpose of effectively implementing the Payment of Gratuity Act, 1972, various compliance measures are imposed on Establishments by the Controlling Authority (i.e., Deputy Labor Commissioner) Regulating the Provisions of the Payment of Gratuity Act, 1972. We provide end to end consultation for following compliances of Rule 3 of the Payment of Gratuity Rules – Notice of Opening, Change or Closure of the Establishment following Forms to be submitted by the establishment to Competent Authority (i.e. DLC Office): -
Form A - Notice of Opening
Form B - Notice for Change in Name, Address, Employer or Nature of Business.
Form C - Notice for Closure of Establishment.
Form F - Nominations - As per provisions of Rule 6 the Payment of Gratuity Rules, All Indian Establishments with employee strength 10 or more are required to maintain the records of Form – F, so that they will have all information available to make the payment of gratuity to employee or his Nominee/Nominees within 30 Days on exit or death of employee (Refer Section 7 of the Payment of Gratuity Act, 1972)
Maintenance of Records Forms prescribed in Rules of the Payment of Gratuity Rules.
Vetting of Board Resolution for Gratuity Trust Formation,Vetting of Gratuity Trust Deed,Vetting of Gratuity Trust Rules &Vetting of Application for Approval from CIT in terms of Rule 109 of Income Tax Rules 1962,
Vetting of Deed of Variations and Applications required by Trustees/Companies for Approvals from CIT for Gratuity Trust in terms of Part C of Schedule IV of Income Tax Act,1961 in following cases: -
§ Deed of variation for Change in Name of Trust,
§ Deed of variation for Change in Address of Trust,
§ Deed of variation for Change in Trustees,
§ Deed of variation for Change in Investment Pattern of Gratuity Fund,
§ Deed of variation for Change in Benefit Formulae for Gratuity Benefits,
§ Deed of variation for Change in Retirement Age of Employees,
§ Deed of variation for Change in Object of Trust
§ Deed of variation for Change in Trust Rules
§ Vetting of application to CIT for Approvals for winding up of Trust
§ Vetting of application to CIT for Approvals for Transfer of Fund in Event of Merger or Demerger
All matter related to Old Gratuity Trusts and Group Gratuity Schemes such as Vetting work of Deed of Variations, Application, Board Resolution and Application to Bank, LIC & CIT in various events such as Merger, De-merger, Acquisitions etc.
B. Actuarial Valuation
Solutions - As per provisions of Section 129 of the Companies Act 2013, Indian
and Multinational Companies Operating India needs to prepare the Financial
Statement such as Balance Sheet & Profit/Loss Accounts at
the closure of each financial year in compliance of Accounting
Standards as stipulated in Section 133 of the Companies Act 2013, so
that they can give a true and fair view of state of affairs of the
company. Accounting and Disclosure requirements for Employee Benefits Plans
is laid down in the following Accounting Standards as issued by The
Institute of Chartered Accountants of India (ICAI) & other
International Accounting Regulators:-
1. Indian Accounting Standard for Accounting of Employees Benefits
·
AS-15 (Revised 2005)
·
IndAS-19
2. Global Accounting Standard
for Accounting of Employees Benefits
·
IAS-19 (Revised 2011) - IFRS
·
NAS 19 - NFRS
·
US GAAP – (FAS-87, 88 & 158) etc.
Generally, Actuarial Valuations for compliance
above Accounting Standards are required for following Employee Benefit Plans
under: -
· Actuarial Valuation for
Gratuity Plans,
· Actuarial Valuation for End
of Service Benefit Plan,
· Actuarial Valuation for
Earned Leave Plan,
· Actuarial Valuation for Sick
Leave Plan,
· Actuarial Valuation for
Defined Benefit Pension Plans,
· Actuarial Valuation for
Post-Retirement Medical Benefit Plan,
· Actuarial Valuation for
Settlement Allowances on Retirement,
· Actuarial Valuation for Long
Service Award Plans/Incentive Plans,
· Actuarial Valuation for
Interest Rate Guarantee for Exempted Provident Funds,
· Actuarial Valuation for
other Defined Benefit
Actuarial Valuations for above plans are
required by the Indian Companies in following events:-
· For Actuarial
assessment for Contribution into Gratuity Trust Account.
· For Actuarial assessment of
Gratuity Liability in BS in compliance of AS 15 Revised 2005 & IndAS 19 as
at closure of Audit on:-
· 31.03.20XX(i.e. Financial
Year Closure),
· 30.06.20XX (i.e. Q1
Closure),
· 30.09.20XX (i.e. Q2
Closure),
· 31.12.20XX (i.e. Q3
Closure).
For Actuarial assessment of Gratuity
Liability of Transferred Employees from Company A to Company B in
following events: -
· On the date of Transfer
within Group Companies,
· On the date of Demerger,
· On the date of Acquisition,
· For submission of Financial
Statements in SEBI for Listing on Share Market.
· For Assessment
of Actuarial Liability of Pension, Gratuity and other Long Term Employee
Benefit Plan for taking Grant of Assets from any Ministry by any
Autonomous Bodies.
Most frequently used terms used in Actuarial
Reports in compliance of the above standards are: -
Present Value of obligation.
Interest Cost.
Current Service Cost.
Service Cost
Past Service Cost.
Curtailment Cost
Settlement Cost
Service Cost.
Benefit Paid.
Actuarial Gain/loss
Experience adjustment
Other Comprehensive Income.
Defined Benefit Obligation.
Statement of Profit/loss.
Interest Rate for Discounting.
Salary Escalation Rate.
Withdrawal Rate
Mortality Rate, etc. etc.
Our Team - We have a team of highly skilled
personnel equipped with the expertise-statistical, actuarial and analytical
essential to meet the changing needs of Accounting Standards. Our
human resources are our strength and asset. We have an office with adequate Infrastructure
(Computer Hardware).
Our Clients:- Our clients are spread
in all sectors of the Indian Economy in the Public &
Private Sectors which covers areas of :-
· Schools,
· Universities,
· IIT’s,
· Manufacturing,
· Software,
· Technology,
· Electricity,
· Electronics,
· Call Centers,
· Banks,
· Educational Institutes,
· Hotels,
· Hospitals,
· Hospitality Companies etc.
etc.
We are associated with more than 500 Global Multinational Companies
(MNC’s). In case of any clarification/requirement on the above subject,
you may send your query/requirement at tikaramchaudhary@gratuitytrustfund.com or
call us at 011-45261651, 9211637063 & 9818322186.
Tika Ram Chaudhary
Founder
Gratuity Trust Fund Consultant
An MSME - Registered with Ministry Micro Small
and Medium Enterprises vide Registration Number UDYAM-DL-11-0013795
(Corporate Consulting Firm providing Actuarial, Legal, Insurance and
Investment Solutions for Employee Benefits (i.e. Gratuity, Leave Encashment,
Pension, PRMB etc.) Trusts in compliance of the Payment of Gratuity Act, 1972,
The Payment of Gratuity (Central) Rules, 1972, CCS Pension Rules,
1972, AS 15 (Revised 2005), IndAS 19, IAS 19 (Revised 2011) – IFRS,
Part C of Schedule IV of Income Tax Act, 1961 & Rule 98-111 of Income Tax
Rules to Indian and Multinational Companies)
Registered Office Address: R 11, F/F, R Block, Vikas Nagar, Uttam Nagar,
New Delhi -110059
Mobile Number: 9211637063, 9818322186
Landline Number: 011-45261651
Email Id: tikaramchaudhary@gratuitytrustfund.com & tikaramchaudhary@gmail.com
LinkedIn Profile: https://www.linkedin.com/in/tika-ram-chaudhary-a5727848/
Ca-club-india Profile: https://www.caclubindia.com/profile.asp?member_id=1446582
Tax Guru Profile: https://taxguru.in/author/tikaramchaudhary@gmail.com/
Website: www.gratuitytrustfund.com
Blog: http://gratuitytrustfundconsultant.blogspot.com
Google Business Listing: https://gratuitytrustfund.business.site/
Our Terms & Conditions: - All services
provided by him are subject to terms & conditions stated
when a job is accepted.
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