01 March 2010
whether the gratuity liability provided for an employee who has completed 10yrs of service during the 10th year instead of ending of the 5th year of service is allowable as deduction or is there are restrictions in this regard
01 March 2010
Income Tax allows expense for gratuity payment made on actual basis or the amount transferred to the gratuity trust fund (if the company has created one). Expense is not allowed on provision basis.
Don't confuse yourself with the provisions of Income Tax Act with the Accounting Treatment (making provisions of liabilities) according to required Indian GAAP.
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