Atul Ltd 2013-14

115 NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (contd) Long-term leave encashment: Long-term leave encashment is provided for on the basis of an actuarial valuation carried out at the end of the year on the projected unit credit method. Actuarial gains | losses are immediately taken to the Consolidated Statement of Profit and Loss. Provident Fund: Provident Fund for certain eligible employees is managed by the Company through the ‘Atul Products Ltd - Ankleshwar Division Employees Provident Fund Trust’ in line with Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee. Any shortfall in the value of assets over the Defined Benefit Obligation is recognised as a liability, with a corresponding charge to the Consolidated Statement of Profit and Loss. c) Short-term leave encashment: Short-term leave encashment is provided at undiscounted amount during the accounting period based on service rendered by employees. d) Voluntary retirement scheme: Compensation payable under the voluntary retirement scheme is being charged to the Statement of Profit and Loss in the year of settlement. 4.15 Taxation: a) Income tax expense comprises current tax and deferred tax charge or credit. Provision for current tax is made on the basis of the assessable income at the tax rate applicable to the relevant assessment year. b) MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax within the specified period. c) Deferred tax asset and deferred tax liability are calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets on account of timing differences are recognised, only to the extent there is a reasonable certainty of its realisation. Deferred tax assets are reviewed at each Balance Sheet date to reassure realisation. d) Deferred tax assets, representing unabsorbed depreciation or carried forward losses, are recognised, if and only if there is virtual certainty supported by convincing evidence that there will be adequate future taxable income against which such deferred tax assets can be realised. 4.16 Government Grants: a) Grants are recognised when there is reasonable assurance that the same will be received. b) Revenue grants for expenses incurred are reduced from the respective expenses. c) Capital grants relating to specific fixed assets are reduced from the cost of the respective fixed assets. d) Grants in the nature of Promoters’ contribution are credited to Capital reserve and treated as a part of Shareholders’ funds. Notes to the Consolidated Financial Statements