G-Sec Interest Rates Yield Chart (India) Review: 31st March 2023

G-Sec Interest Rates Yield Chart (India) Review: 31st March 2023

Actuarial Valuations: Gratuity, Leave & Pensions

AS-15 | Ind AS 19 | IAS 19 | US GAAP

Review date: 1st April, 2023

Discount Rate for Actuarial Valuation of Employee Benefit

As per Para 83 of IND AS 19/IAS 19 (Revised) & Para 78 of AS 15 (Revised), the rate used to discount post-employment benefit obligations (both funded and unfunded) should be determined by reference to market yields at the balance sheet date on government bonds.

Key Observations: 12 monthly reviews

  • There is a sharp upsurge in the short term interest rates primarily led by ongoing rate hike cycle by US impact the monetary policies world over.
  • A modest surge of 25 to 30 basis points is seen in long term yields

Entities could expect liabilities to reduce by 4.5% because of interest rate increase (assuming a 10-year term of obligation and a 40 basis points increase in interest rates)

About Discount Rate & Use in Actuarial Valuations

The  discount  rate  is  a  key  assumption  used  in  the  Actuarial valuation  of  employee  benefit  liabilities.  Actuarial  valuation primarily  finds  the  Present  value  of  the  liabilities  (or benefits), that  are  expected  to  be  paid  in  the  future.  For  this  purpose,  it is  vital  to  use  the  appropriate  discount  rate.  The  various accounting  standards  have  prescribed,  for  the  purpose  of Employee  Benefit  valuations,  the  basis  for  choosing  the discount  rate. It  states  that  an  entity  should  use  the government  bond  yields  (or  corporate  bond  yields,  where applicable)  for  a  term  that  is  equivalent  to  the  maturity  term of  the  liabilities.  Because  of  the  aforesaid  Guidance,  the  year-on-year  movement  in  the  discount  rate  is  reflected  in  the  year-on-year  fluctuations  in  the  Company’s  Profit  and  Loss and  Balance  sheet.

For any query, observation, or more information please reach us personally at

Mr. jenil Shah,
Consulting Actuary
jenil@kapadiaglobal.com
+91-9867075522

Anil Sevak -director-kapadia global Actuaries

Mr. Anil Sevak,
Head: Employee Benefits
anil@kapadiaglobal.com
+918454066628