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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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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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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Impact of increase in gratuity limit on actuarial liability

Gratuity Amendment Bill 2017

The Government of India is all set for an increase in gratuity limit to ₹20 lakhs. Companies reporting under Ind AS 19 will be affected more than those reporting under AS 15. This post provides the background on gratuity benefit and explains the accounting implications for companies. Update: The increase in gratuity limit has come into […]

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7 issues to consider for auditing actuarial valuation reports

Issues to consider for auditing actuarial valuation reports

The usual approach taken by auditors in reviewing and validating actuarial valuation reports requires a fundamental shift. Often the approach used fails to uncover significant errors. Audit of actuarial valuation reports is a challenging task. Reviewing a piece of work of such a technical nature is a significant ask from anyone who doesn’t have an […]

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FAQs about discount rate for actuarial valuation

setting the discount rate for actuarial valuation

Setting the discount rate for actuarial valuation correctly is often not very well understood by the reporting companies. This post summarizes some of the most common questions our clients and their auditors ask about choosing the right discount rate. For a complete overview about setting the discount rate, please refer to this post. 1) What is the […]

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