This article is an attempt to give a brief about the Steps involved in Formation of Trust for Gratuity Fund. The different steps for Formation of Retirement Benefit Trust are as under :
1. Assessment of Gratuity Liability - The process of formation of Gratuity Fund starts with assessment of gratuity liability on actuarial basis by taking as actuarial valuation certificate from An Actuary. Inputs for Actuarial Valuation is prepared by the HR Department of the Organization. It normally takes 2 to 3 days to complete this exercise.
2. Once the actuarial valuation certificate for accrued liability of gratuity is received from the Actuary, Management or Society of Organization can decide the Corpus of Investment into the Gratuity Fund of an Approved Gratuity Trust.
3. A board resolution is passed by the Management of the Organization to form a Irrevocable Trust for Gratuity Fund.
4. Registration of Trust Deed - Indian Trusts Act, 1882 regulates and administers the private trusts in India, whereas the Public Trusts Direct the functioning of the public trusts except in the state of Maharashtra and Gujarat where public trusts are governed by Bombay Public Trust Act, 1950 :-
I. Trust Deed/Trust Rules is executed on a Non Judicial Stamp Paper.
II. Next Step is to Seek an appointment with the Sub Registrar office having jurisdiction based on the registered office of the Trust, and the Government Registration fee is to paid after that.
III. On appointment Date the Trust Deed is presented before the sub registrar where all trustees need to be present along with 2 witnesses.
IV. The registration process is undertaken by the office of the sub-registrar, and the registered deed can be collected after a week.
V. Once the Registered Deed is received then apply for PAN & TAN of the Trust and open a Bank Account in a Scheduled Bank as listed in for the Trust. It may take 30 Days.
VI. Once the Bank Account in a Scheduled Bank is opened then Organization Transfer the funds into Trust Bank Account.
5. Investment Decision - Once the Gratuity Fund is received from the organization into the Trust then the next step for the Trustees is to make decision for Investment of Gratuity Fund either by themselves or they can approach Insurance Company.
6. Application for Approval of Gratuity Trust - Once the Investment is done then organization needs to submit an application to their Zone Income Tax Commissioner for Approval of Gratuity Trust with a Copy of Trust Deed/Trust Rules, Investment details and other relevant documents.
The author can also be reached at tikaramchaudhary@gmail.com
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