There are two architectures. Under defined contribution (DC), the employer pays a fixed contribution (say 12% of salary into India's EPF) and the employee bears all the investment risk. Expense equals the contribution and that's the end of it, with no balance-sheet residue beyond unpaid amounts. Under defined benefit (DB), the employer promises an outcome (a pension formula, a lump sum) and bears the risk. DB accounting (IAS 19 / Ind AS 19 / ASC 715) fits in one line. The balance sheet carries the funded status = fair value of plan assets − present value of the defined benefit obligation (DBO/PBO), as a net liability (deficit) or asset (surplus). The DBO is an actuarial present value, and it's extremely sensitive to the discount rate and to salary-growth assumptions. For the discount rate, India uses government-bond yields (~7% area recently) and the US uses high-grade corporate yields. A lower discount rate balloons the obligation.
Now the geography of the P&L. Current service cost goes in operating expense. Net interest on the net liability goes in finance cost under IFRS/Ind AS, and US GAAP similarly shows only service cost in operating, with the other components below. Remeasurements (actuarial gains/losses, asset returns vs assumption) go to OCI. Under IFRS/Ind AS they never recycle to P&L. Under US GAAP they're parked in AOCI and amortize back over time through the "corridor" machinery, which you'll work through with numbers on the net periodic pension cost page.
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How does gratuity work in India?
India context. Every Indian employer runs a statutory gratuity plan. It's a defined benefit of roughly 15 days' last-drawn salary per year of service, vesting at five years (Payment of Gratuity Act, 1972). So every Indian annual report has a DB note with actuarial assumptions, even at young IT companies. EPF is DC, with one exception. Company-managed exempt PF trusts that guarantee the statutory rate are treated as DB to the extent of the guarantee. Compensated absences (leave encashment) are another actuarial liability.
From this section, take the funded status, the P&L geography and the two India-specific plans. The fuller pensions treatment on the defined benefit obligation page has the rest. It carries the full obligation roll-forward, the discount-rate and salary-growth sensitivities worked out in numbers, cash-settled share-based awards, and the analyst adjustment that moves service cost and net interest to where they belong. A funded-status practice item below bridges the two, and you should be able to do it before you move on.
How should analysts treat a pension deficit?
The standing adjustments. Treat a material DB deficit as debt, and add it to EV, because it ranks ahead of shareholders. Check the assumptions before trusting the number. And know the history, because legacy DB plans have eaten companies: GE's multi-billion-dollar pension deficit, and the British Steel Pension Scheme that shaped Tata Steel's UK restructuring. Indian gratuity liabilities are usually small relative to market cap. Still, never skip the note for old-economy PSUs and banks, which also carry DB pension plans proper.