Group Gratuity Scheme

Group Gratuity Scheme – A Group Gratuity Scheme is an employee benefit plan offered by an employer to provide gratuity payments to a group of employees upon retirement, resignation, or death, in accordance with the Payment of Gratuity Act, 1972. These schemes are typically administered by insurance companies and cover all eligible employees under a single policy, helping employers manage gratuity liabilities efficiently. Contributions made to a recognized group gratuity fund are tax-deductible for the employer, while the benefits received by employees are taxable under certain conditions as per the Income Tax Act.

Example: If a company contributes to a group gratuity fund in FY 2022–23, the contributions and accrued benefits are accounted for, and any tax implications are evaluated in AY 2023–24.