Group Gratuity Scheme

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 actuarial valuation every year and to be provided in the

books of account of the Company. Gratuity liability increases with

increase in salary & service 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

Income Tax Act - LIC provides 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 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

o Contributions to LIC are treated as business expenses to the

company

o 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 financial year

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

Competitive and consistent returns due to large volumes of funds

under management

excellent track record of more than 50 years

Most trusted brand with Wide net work of branches

Option to trustees to transfer their self managed funds to LIC -

incremental investments or total portfolio

Opportunity to earn higher interest if Superannuation/Leave

encashment benefit is also funded with LIC