For actuarial valuation under Ind AS 19 and AS 15, the discount rate must reflect the yield on high-quality corporate bonds of a duration consistent with the estimated term of the benefit obligation. In India, in the absence of a sufficiently deep market in high-quality long-duration corporate bonds, Government Securities (G-Sec) yields are used as the reference rate — a practice consistently accepted by most auditors.
The data below is sourced from FBIL (Financial Benchmarks India Pvt. Ltd.) — the RBI-designated benchmark administrator — specifically the Fixed Interest Securities G-Sec prices and yields published as at 30 March 2026.
FBIL G-Sec Yield Curve — 30 March 2026
The chart below plots all traded G-Sec bonds by tenor and YTM as published by FBIL on 30 March 2026. The curve shows the classic upward-sloping shape across the 1–30 year range, with a slight hump around 6–7 years.
Source: FBIL Fixed Interest Securities — G-Sec Prices/YTMs, 30 March 2026. All traded bonds excluding Floating Rate Bonds (FRBs).
Reference Rates at Standard Actuarial Tenors
The table below presents yields interpolated at round-year tenors from the observed FBIL data. The appropriate rate for your specific scheme depends on the Macaulay Duration of your benefit obligation, computed by your actuary using the Projected Unit Credit method.
| Tenor | FBIL G-Sec YTM (% p.a.) |
|---|---|
| 1 year | 5.90% |
| 2 years | 6.41% |
| 3 years | 6.43% |
| 4 years | 6.77% |
| 5 years | 6.80% |
| 6 years | 7.06% |
| 7 years | 7.09% |
| 8 years | 7.03% |
| 9 years | 6.99% |
| 10 years | 7.11% |
| 12 years | 7.22% |
| 15 years | 7.49% |
| 20 years | 7.67% |
YTMs interpolated linearly at round-year tenors from observed FBIL bond yields. Semi-annual compounding basis. FRBs excluded.
How the Discount Rate Is Selected for Your Scheme
The actuary computes the Macaulay Duration of your benefit obligation using the PUC method — the weighted average time to payment of each unit of benefit, discounted at the current rate. The yield at that duration is selected from the G-Sec curve.
Typical duration ranges for Indian employee benefit schemes:
- Gratuity / Leave encashment (high attritions / advance aging): 2–5 years
- Gratuity / Leave encashment (medium attritions / medium aging): 5–10 years
- Gratuity / Leave encashment (low attritions / young aging): 10–15 years
- Defined benefit pension: 10–20 years — long-tail payments extending well into retirement
Sensitivity Analysis — Ind AS 19 Para 145
Ind AS 19 requires disclosure of the sensitivity of the DBO to changes in significant actuarial assumptions. At the 7-year reference point (7.09% p.a.), a ±50 basis point change produces approximately:
| Change in Discount Rate | Approximate Impact on DBO | Direction |
|---|---|---|
| +50 bps → 7.59% | Decrease of ~4.5–5.5% | Liability reduces |
| −50 bps → 6.59% | Increase of ~4.5–5.5% | Liability increases |
The sensitivity percentage varies with duration — longer duration schemes show larger DBO movement for the same rate change (assumed approx 10 year term for obligation in above example).
Movement Since December 2025
G-Sec yields have shifted modestly since the December 2025 valuation date. The 10-year benchmark yield moved from approximately 6.95% in December 2025 to 7.11% at 30 March 2026 — an increase of approximately 16 basis points. For companies with a March 2026 year-end, this rate increase will generally produce a lower DBO compared to December 2025, all else equal — a favourable balance sheet movement.
Frequently Asked Questions
Can I use a corporate bond yield instead of G-Sec?
Ind AS 19 Para 83 states the rate should be determined by reference to market yields on high-quality corporate bonds. Where no deep market exists in such bonds, government bond yields are used. In India, the G-Sec yield is the universally accepted reference. A small spread for AA-rated corporate bonds may be applied where client auditors specifically require it.
What if my company has a non-March year-end?
The discount rate must be determined as at the valuation date (your balance sheet date). Kapadia & Kochrekar publishes reference yields at each quarter-end. For interim dates, we use the FBIL data as at your specific valuation date.
Does the same rate apply to all benefits?
No. Each benefit has its own duration, and therefore its own discount rate. Gratuity, leave encashment, pension, and PRMB will typically use different rates from the curve, though in practice the difference between adjacent rates is small enough that many actuaries use a single blended rate for companies with both gratuity and leave obligations.