Practice — Valuation Reports

Gratuity valuation report for statutory audit.

Gratuity is a future liability that depends on how long an employee stays and their future salary — you can't simply guess the amount. We coordinate with certified actuaries to deliver a scientific, defensible valuation for your auditor.

Quick answer

If your company has 10 or more employees, gratuity valuation is mandatory under the Payment of Gratuity Act, 1972 — and auditors require an actuarial report, not a manual estimate. The report uses the Projected Unit Credit method and typically takes under a week from the moment we receive your final data. Pricing starts from ₹13,500.

Why this valuation is mandatory

AS 15 (Revised) or Ind AS 19 — which applies to you?

If your company has 10 or more employees, the Payment of Gratuity Act, 1972 makes it a legal obligation to pay gratuity to those who complete 5 years of service. Auditors require an actuarial report to verify you've set aside enough to meet these future payouts.

Feature	AS 15 (Revised)	Ind AS 19
Applicability	Small and medium-sized unlisted companies	Listed companies and large entities with high net worth
Gain/loss reporting	Any change in valuation goes straight to the P&L Account	Changes go to Other Comprehensive Income (OCI) — doesn't hit net profit
Complexity	Standard reporting	Requires advanced sensitivity analysis and 10-year cash flow projections

What's covered in the report

The gold standard method — Projected Unit Credit.

Our actuary uses the Projected Unit Credit (PUC) Method, the standard required by Indian accounting rules.

Present Value of Obligation

The current value of all future gratuity payments you are expected to make.

Service cost

The cost of the gratuity "earned" by your employees during the current year.

Interest cost

The interest accrued on the previous year's liability.

Actuarial assumptions

Detailed notes on discount rates, salary growth rates, and attrition rates used in the calculation.

What is required to start

A simple Excel sheet — that's all we need.

Date of birth & joining — to calculate age and total service years.

Monthly basic salary + DA — since gratuity is calculated on these components.

Past experience — your company's historical attrition (resignation) rate.

Previous year's report — if you've had a valuation done before, for movement analysis.

Our actuarial process

The five steps we handle for you.

We simplify the complex math so you can focus on your business.

Data review

We check your employee data for inconsistencies, like missing joining dates or incorrect salary figures.

Setting assumptions

Our team helps you set realistic assumptions for salary growth and attrition based on your industry.

Calculation

The actuary applies the discount rate — usually based on government bond yields — to determine the present value.

Draft report

We share the initial numbers with you and your auditor to ensure everyone is aligned on the provisioning.

Final certification

You receive a signed actuarial certificate, ready to be attached to your audit file.

Indicative pricing

What does it cost?

Starting price

The cost of the Gratuity Valuation Report starts from ₹13,500.

Related practice area

Usually done alongside leave encashment.

Frequently asked questions

Common questions about gratuity valuation.

Is gratuity valuation mandatory for companies with fewer than 10 employees?

The statutory obligation to pay gratuity under the Payment of Gratuity Act, 1972 applies once a company has 10 or more employees. Below that threshold, the requirement depends on your company's own policy and whether gratuity is being provisioned voluntarily.

How do I know if AS 15 or Ind AS 19 applies to my company?

Ind AS 19 generally applies to listed companies and large entities crossing specified net worth or turnover thresholds under the Companies (Indian Accounting Standards) Rules. Smaller unlisted companies typically follow AS 15 (Revised). We confirm which applies during the initial data review.

Why can't our internal finance team calculate this without an actuary?

Actuarial valuation requires applying the Projected Unit Credit method with specific discount rate, salary growth, and attrition assumptions — a certified actuary's sign-off is what auditors require to accept the provisioning as compliant, not an internal estimate.

Do we need a fresh valuation every year?

Yes — gratuity valuation is an annual exercise tied to your statutory audit cycle, since your employee base, salaries, and the discount rate environment all change year to year.

What is the cost to get the Gratuity Valuation Report?

The cost starts from ₹13,500, and can be paired with your leave encashment valuation for combined efficiency at no additional delay.

Ready for your gratuity valuation?

Schedule a no-obligation discovery call. We'll review your employee data and typically pair this with leave encashment.

Schedule a consultation Write to rohit@krprassociates.com