Gratuity trust fund

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 August 2011 what is the accounting for contributions made to gratuity trust maintained by the private company for paying gratuity to their employees????
Whether the company has the liability to pay tax on the interest received on fund with LIC????

If the company till now not obtained PAN number, but obtained approval from the Income Tax Dept, whether it is liable to pay tax on the interest income earned on the fund with LIC????

VISHRUT

VISHRUT (Expert)
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29 August 2011 For the purpose of contribution made to gratuity fund following entry shall be passed :

Gratuity Expense a/c Dr.
To LIC

2. Company is liable to pay tax on interest received on fund with LIC.

3. IF Company do not have PAN and got approval letter still it is liable to offer such interest income for tax.

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