Discount rate for actuarial valuation as at 31 March 2018

Discount rate for actuarial valuation 31 March 2018

It is the end of another financial year and time for companies to prepare their year-end financial statements for FY 2017-18. The discount rate for actuarial valuation as at 31 March 2018 is now known. This post explains the movement in the interest rate curves over the FY 2017-18 and how that is expected to […]

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Increase in gratuity limit to Rs 20 lakhs | Regulatory update

impact of increase in gratuity limit

The amendment to Payment of Gratuity (PG) Act, 1972, has finally come into force with the notification in the Gazette of India on 29 March 2018. This amendment has led to an increase in gratuity limit to Rs 20 lakhs, from Rs 10 lakhs earlier. The timing of this notification means that companies will need […]

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Applicability of actuarial valuation on leave schemes

is actuarial valuation mandatory for leave encashment

Companies often ask us if an actuarial valuation mandatory for leave schemes. It is clear that accounting and audit professionals require some additional guidance on this matter. In this post, we aim at addressing this issue. The short answer is, an actuarial valuation will be applicable if your company offers leave benefits that would require […]

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Applicability of actuarial valuation on gratuity scheme

applicability of actuarial valuation

All kinds of businesses, in whatever form and size, have expressed a desire to understand the regulatory framework under which actuarial valuations are performed. This is especially true for the most common benefit in India – the gratuity scheme. This blog explains the applicability of actuarial valuation of gratuity under different instances. But before diving into the […]

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Actuarial valuation of gratuity – sensitivity to assumptions and employee profile

actuarial valuation of gratuity sensitivity

What are the factors that will have an impact on the actuarial valuation of gratuity liability? What will be the magnitude of this impact? How will the gratuity liability impacted if the government increases gratuity limit to ₹20 lakhs? These are questions about the actuarial valuation of gratuity which almost every company’s management team wants […]

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Discount rate for actuarial valuation as at 31 Dec 2017

Discount rate chart

For many companies, this is the time to finalise their interim accounts for the third quarter of FY 2017-18. An understanding of the movement in discount rate during this period will help in making an appropriate provision towards employee benefits liabilities. Comparison of yield curves: 31 Dec 2017 vs 31 Mar 2017 The discount rate […]

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Actuarial valuation of pension liability in corporate transactions

actuarial valuation of pension in mergers and acquisitions

During corporate transactions, such as mergers and acquisition, actuarial valuation of pension and other employee benefit schemes is often ignored. The parties involved in the transaction spend most of their time and focus on ‘tangible’ aspects of the balance sheet. They end up taking ‘shortcuts’ or proxy approaches with disastrous consequences for their shareholders. I […]

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Superannuation fund taxation from employer’s perspective

Employee benefit

Before we start with taxation on superannuation fund, let us understand what exactly is a superannuation fund. Makes sense, so what is superannuation fund ? Cambridge dictionary defines “superannuation” as “money that people pay while they are working, so that they will receive payment when they stop working when they are old, or the payment they receive when they stop working” So, in simple words, superannuation funds refer to the […]

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Why don’t we need actuarial valuation of future salary?

actuarial valuation of employee benefits

We often get asked: is actuarial valuation of future salary needed? Or, why don’t we just calculate the present value of future salary and hold that as a liability, just like we do for gratuity benefits? Though AS 15 and Ind AS 19, both deal with the treatment of all employee benefits (except share based payments), […]

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Gratuity taxation – how it applies to your company

tax on gratuity

Almost all Indian companies (more than 10 employees) pay gratuity to their employees. Since, gratuity payments are an expense to the company, companies can claim tax-deduction on the same. You can read about Payment of Gratuity Act, 1972 here.

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