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