Provision for Gratuity fund is deductible only if such Gratuity fund is an approved one. However following points are noteworthy in this relation

• No deduction is allowed in computing business income wherein a mere provision is made by assessee towards payment of Gratuity liability.
   

• Gratuity received by an employee is deductible in the year of receipt if not deduction is claimed earlier.
   

• In case of Gratuity is payable to employees in next year and a provision is made in the books of accounts in the current year, then entire amount is deductible even if the gratuity fund is an unapproved one.