Deductibility of gratuity provisions limited: only approved gratuity fund contributions or gratuities already payable qualify.

Amendment replaces subsection (7) of section 40A to disallow deductions for provisions made by an assessee for payment of gratuity to employees on retirement or termination, except where the provision is for contributions to an approved gratuity fund or for gratuity that became payable during the previous year; additionally, if such a provision was previously allowed as a deduction, any sum paid out of it as a contribution to an approved gratuity fund or as gratuity shall not be allowed as a deduction in the previous year in which it is paid.

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