The pay revision of the officers and employees has been
carried out by the Public Sectors Insurance companies in
the year 2010-11 and Government by Gazette, Notification
dated May 24, 2010 has revised upward maximum limit for
Gratuity under “Payment of Gratuity Act 1972” from Rs.
3,50,000/- to Rs. 10,00,000. The above factors will lead
to the increase in liability on account of gratuity
which in turn will impact the insurers profitability
significantly as they need to provide the same in the
financial year 20010-11. This will cause a strain on
their solvency as well as on their performance results.
In view of the above, Authority hereby permits the
insurers to amortize the additional liability on
account of gratuity over a period of five years starting
from financial year 2010-11 subject to compliance of the
following conditions
The additional liability on account of enhancement in
gratuity limits may be fully recognized and charged to
Revenue Account and/or Profit and Loss Account for the
financial year 2010-11.The expenditure indicated above,
may, if not fully charged to the Revenue Account and/or
Profit and Loss Account during the financial year
2010-11, be amortized over a period of five years
(subject to (ii) below) beginning with the financial
year ending March 31, 2011 subject to a minimum of 1/5th
of the total amount involved every year.
The unamortized expenditure carried forward should not
include any amounts relating to separated/retired
employees.
A complete disclosure in the notes of accounts to this
effect giving the total amount of liability on this
account, amount already recognized to revenue / profit &
Loss Account and the remaining amount should be made in
the Notes to Accounts to the financial statements.
carried out by the Public Sectors Insurance companies in
the year 2010-11 and Government by Gazette, Notification
dated May 24, 2010 has revised upward maximum limit for
Gratuity under “Payment of Gratuity Act 1972” from Rs.
3,50,000/- to Rs. 10,00,000. The above factors will lead
to the increase in liability on account of gratuity
which in turn will impact the insurers profitability
significantly as they need to provide the same in the
financial year 20010-11. This will cause a strain on
their solvency as well as on their performance results.
In view of the above, Authority hereby permits the
insurers to amortize the additional liability on
account of gratuity over a period of five years starting
from financial year 2010-11 subject to compliance of the
following conditions
The additional liability on account of enhancement in
gratuity limits may be fully recognized and charged to
Revenue Account and/or Profit and Loss Account for the
financial year 2010-11.The expenditure indicated above,
may, if not fully charged to the Revenue Account and/or
Profit and Loss Account during the financial year
2010-11, be amortized over a period of five years
(subject to (ii) below) beginning with the financial
year ending March 31, 2011 subject to a minimum of 1/5th
of the total amount involved every year.
The unamortized expenditure carried forward should not
include any amounts relating to separated/retired
employees.
A complete disclosure in the notes of accounts to this
effect giving the total amount of liability on this
account, amount already recognized to revenue / profit &
Loss Account and the remaining amount should be made in
the Notes to Accounts to the financial statements.
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