Group Life Insurance (From LIC of India)
This is a Statutory benefit to the employees for their services to the Employer and is governed by the Gratuity Act, 1972 (Amended 2010). This Act stipulates payment of Gratuity as a statutory benefit to such employees who have rendered continuous service of at least five years. If employer wishes to pay Gratuity benefits better than the statutory requirements may as well be offered.
As per revised accounting standards, the gratuity liability is to be estimated by a actuarial valuation every year and to be provided in the books of account of the company. Gratuity liability increases with increase in salary and services of the employee every year. Thus a prudent employer should create a Gratuity Fund instead of making provisions in the books of account. Developing such fund with LIC would help the company in creating an asset to meet the gratuity liabilities of the company in a most tax effective manner.
Features and Benefits of the Scheme
Tax Benefits
MIS
As per revised accounting standards, the gratuity liability is to be estimated by a actuarial valuation every year and to be provided in the books of account of the company. Gratuity liability increases with increase in salary and services of the employee every year. Thus a prudent employer should create a Gratuity Fund instead of making provisions in the books of account. Developing such fund with LIC would help the company in creating an asset to meet the gratuity liabilities of the company in a most tax effective manner.
Features and Benefits of the Scheme
- Employees' Gratuity trust needs to be set up as per provisions of Incime Tax Act - we provide necessary assistance and guidance in this process.
- LIC maintains the fund under the name of the trust.
- Investment of funds is taken care by LIC and interest is declared as per the per the performance of the total fund and credited to individual trust funds.
- At the time of exit of an employee, trustees send discharge, and advise LIC to make payment of Gratuity as per scheme to the trust.
- The insurance scheme of LIC provides future service gratuity in case of Unfortunate death of the member at a very reasonable cost.
Tax Benefits
- Contribution to LIC are treated as business expenses to the company.
- Interest earnings by the fund are TAX FREE.
MIS
- The actuarial valuation of Gratuity liability is provided periodically.
- Statement of receipts and payments, certificate of balance are provided at the end of the year.
