Provision for gratuity

This query is : Resolved

AJK (Querist)
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06 February 2009 When do we need to make provision for gratuity in the books of accounts ?
- when the employee completes 5 yrs of service, then we need to provide in books of accounts OR
- when the employee joins the co & we start paying him mthly salary

Pl provide clarity on same ASAP
thanks in anticipation

Hiral Raja

Hiral Raja (Expert)
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07 February 2009 Company needs to make provision from the day the employee joins the COmpany. As per AS 15 (Revised), Company will have to do actuarial valuation (who will make assumptions as to how many employees will complete 5 years of leave before that).. Provision has to be made based on the actuarial valuation done by a actuary..

AJK

AJK (Querist)
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13 February 2009 Hi

Thanks H Raja for your answer. This actural valuation done by actuary is when done by them? is it quarterly ? yearly ? how?

how do i make monthly prov for gratuity ? on what basis ?

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