The ICAI has issued a set of FAQs to clarify accounting treatment of the increased liability arising from enhancement of gratuity ceiling from Rs. 10 Lac to 20 Lac, i.e. Payment of Gratuity (Amendment) Act 2018, under the AS-15/ Ind AS-19 (Employee Benefits).
ICAI has clarified that aforementioned accounting standards do not provide any exemption/ one time relief with regard to the accounting treatment of increase in liability arising on account of past service cost. Accordingly, ABC Ltd. is required to account for any increase in the liability on account of increase in gratuity ceiling as expense as per the requirements of the relevant applicable Standard.