GREAT WAY TO INVEST GRATUITY CONTRIBUTIONS

LIC’S NEW GROUP GRATUITY CASH ACCUMULATION SCHEME

G ratuity is an important Statutory Retirement Benefit for the employee and is governed by the Payment of 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. The amount of Gratuity payable is equal to 15 days of last drawn salary for each year of service calculated on the exit date subject to limit as per Gratuity Act. If employer wishes to pay Gratuity benefits better than the statutory requirements may as well be offered.

CREATING GRATUITY FUND

In order to fund the Gratuity liability and derive the tax benefits thereon, a Gratuity Trust is created as per Part C of Schedule IV of the Income Tax Act, 1961 and seek approval from Commissioner of Income tax- LIC provides necessary guidance in this process.

ADMINISTERING THE GRATUITY FUND

The most important part of the Trust administration is investment of funds as per the prescribed pattern. LIC’s Group Gratuity Scheme is an approved and seamless method to invest the contributions received by the Gratuity Trust and gives full compliance. The unique feature of the Group Gratuity Scheme is to provide future service gratuity to the employee, in case of unfortunate death of the employee during service.

ADVANTAGES OF GROUP GRATUITY SCHEME

Group Gratuity Scheme gives the advantage to the employer to meet the statutory obligation by accumulating the fund in a budgeted manner through the scientific process of Actuarial Valuation. The employer can realise the Income Tax benefits in advance every year, as the contributions are treated as business expenses to the company.

UNIQUE ADVANTAGES WITH LIC

Only Public Sector Life Insurer in the country. Gratuity contributions including interest additions enjoy Sovereign Guarantee in terms of Sec.37 of LIC Act, 1956.