The Institute of Chartered Accountants of India (ICAI) has clarified that companies must treat increased gratuity liability, stemming from new labor codes, as a past service cost and recognize it as an immediate expense. These codes redefine wages and ease eligibility for fixed-term and contractual workers, potentially impacting near-term profitability. The ICAI's guidance, part of FAQs on labor code accounting implications, advises companies to account for this in their December quarter financial statements.