Why creating gratuity trust becomes mendatory for companies

Tikaram Chaudhary (Founder of Gratuity Trust Fund Consultant) (2187 Points)
Replied 23 February 2019

Gratuity benefits are governed by "The Payment of Gratuity Act 1972" and paid by the Company to an employee in addition to his salary on exit from the company. Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, -

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

Gratuity is a statutory right of employee whoever completes 5 years in the same organization and is a terminal. It means, Gratuity amount is determined only on the monthly terminal wages of the employee on his exit from the Company after the completion of 5 years of Service. The cost is to be borne by the Company and not by an employee. hence, unlike other fringe benefits (i.e. Medical Insurance, Term Insurance & Accidental Insurance) it can not be part of CTC.

To understand this, let us take an Example,

Mr. A Joins the Organization with a Basic Pay of Rs. 26,000/- per month and monthly CTC of 50,000/-. Assuming that expected increase in basic salary is assumed to be 10% p.a.

Now Gratuity Payments for next 5 years will be :-

On Completion of 1 Yr - (15/26)* 28,600*1 = 16,500/-

On Completion of 2 Yrs - (15/26)*31,460*2 = 36,300/-

On Completion of 3 Yrs - (15/26)*34,606*3 = 59,895/-

On Completion of 4 Yrs - (15/26)*38,067*4 = 87,847/-

On Completion of 5 Yrs - (15/26)*41,873*5 = 1,20,788/-

Now for making the payment of gratuity, Company has 2 options :

(i) Pay as you go option - Where company makes a provision of Gratuity in the Balance Sheet on the accrual basis taking an actuarial report on BS date from an Actuary and as and when Mr. A leaves the organization, company pay gratuity from their resources and get the tax benefit for the gratuity paid.

Expected Tax Benefit calculation in case of "Pay as you Go Option" :-

For Provision of 1st Yr - NIL

For Provision of 2nd Yr - NIL

For Provision of 3rd Yr - NIL

For Provision of 4th Yr - NIL

For Payment on 5th Yr - 1,20,788/-

In this case company, Mr. A will leave the company then company will get the tax benefit of Rs. 1,20,788/-.

(ii) Funding Option - In this option, Company decides to Setup an Approved Gratuity Trust . The Investment of Company is either "Self Managed " or “ Manager by Insurance Company”. Company contribute the annual contribution in this Gratuity Trust and get the Tax Benefits. In this case, when Mr. A will leave the company, gratuity will be to Mr. A from the Gratuity Trust.

Expected Tax Benefit calculation in case of “Funding Option” under Section 36(1)(v) of the IT Act 1961 for Annual Contribution which is 8.33% of Annual Basic Salary of Employee.

For Contribution of 1st Yr - 28,600*12*0.833 = 28,589/-

For Contribution of 2nd Yr - 31,460*12*0.833 = 31,447/-

For Contribution of 3rd Yr - 34,606*12*0.833 = 34,592/-

For Contribution of 4th Yr - 38,067*12*0.833 = 38,051/-

For Contribution of 5th Yr - 38,067*12*0.833 = 41,857/-

In this case, Mr. A will get gratuity of Rs. 1,20,788/- from the Gratuity Trust and employer will get approximate Tax Benefits of Rs.1,74,536/- for annual contribution made by him in previous 5 years.

To get more clarity on the above example, let us take some more questions about the possibilities/event that may happen on or after completion of 5 years and their impact on the Company in case of "Funding Option" :-

Question 1. If employee died during 1st to 4th year before completion of 5th year, then what would be the benefit for Company and employee's Nominee ?

Answer 1. If employees died after 1 yr, 2nd, 3rd and 4th year but before completion of 5th year, then the company will get tax benefits for the following contributions:-

For Contribution of 1st Yr - 28,600*12*0.833 = 28,589/-

For Contribution of 2nd Yr - 31,460*12*0.833 = 31,447/-

For Contribution of 3rd Yr - 34,606*12*0.833 = 34,592/-

For Contribution of 4th Yr - 38,067*12*0.833 = 38,051/-

The company will get the Tax for the contribution made by him before the date of death of the employee as stated above and employee's nominee will get following Gratuity Payments from the Trust along with a future service gratuity subject to certain limits as defined by the Insurance Company whilst taking Group Gratuity Scheme from the Insurance Company.

Question 2. If the employee resigns during 1st to 4th year and before completion of 5th year, then what would be the benefit for Company and employee?

Answer 2. If employees resign during 1st to 4th year and before completion of 5th year, then the company will get tax benefits for the following contributions:-

For Contribution of 1st Yr - 28,600*12*0.833 = 28,589/-

For Contribution of 2nd Yr - 31,460*12*0.833 = 31,447/-

For Contribution of 3rd Yr - 34,606*12*0.833 = 34,592/-

For Contribution of 4th Yr - 38,067*12*0.833 = 38,051/-

For Contribution of 5th Yr - 38,067*12*0.833 = 41,857/-

and the employee will not get following Gratuity Payment from the Trust. The amount contributed by the company and interest accrued will be used by the trust for future payments of Gratuity to other employees of the company.

Question 3. If the employee resigns/retires after completion of 5th year, then what would be the benefit for Company and employee?

Answer 3. If employees resigns/retires during after completion of 5th year, then the company will get tax benefits for the following contributions:-

For Contribution of 1st Yr - 28,600*12*0.833 = 28,589/-

For Contribution of 2nd Yr - 31,460*12*0.833 = 31,447/-

For Contribution of 3rd Yr - 34,606*12*0.833 = 34,592/-

For Contribution of 4th Yr - 38,067*12*0.833 = 38,051/-

For Contribution of 5th Yr - 38,067*12*0.833 = 41,857/-

Total Contribution in 5 years...........................= Rs.1,74,536/-

and the employee will get Rs. 1,20,788/- as Gratuity Payment from the Trust. Since the company has contributed an amount in the trust is more then what is payable after 5th year so the surplus amount and interest accrued on the contributions of will be used by the trust for payment to the other employees.

From above examples of "Pay as you go Option" and "Funding Option," it is clear that Gratuity cannot be a part of CTC but it is a legal obligation which is borne by the Company on exit of the employee.

The Company may have an option to set up a Gratuity Trust and make an annual contribution in the "Irrevocable Trust" so that he can avail the tax benefits Section 36(1)(v) of the IT Act 1961 and will have a Corpus in "Irrevocable Trust" which will be exclusively used by the Trustees to meet with Company obligation towards Gratuity Payments.

To know more about Employee Benefits Plans Restructuring as per the rules and regulations of the Act/Acts (i.e. Gratuity, Leave Encashment & Long Service Awards), Gratuity Trust Fund Set-up & Retention Schemes like Employer-Employee Scheme for your highly paid Employees.

You may avail our Consultancy Services.

With Regards

Tikaram Chaudhary

Group Gratuity Trust Fund & Group Insurance (Retention Schemes) Consultant

(Experienced Consultant with 10 years of exposure in assessment/valuations of Employees Benefit Liabilities specially Gratuity/Leave Encashment Liabilities & Retention Schemes)

Email Id: gratuityconsultant @ gmail.com

Mobile Number: 9211637063

For more details about us visit our blog at www.gratuityconsultant.blogspot.com

Tikaram Chaudhary (Founder of Gratuity Trust Fund Consultant) (2187 Points)
Replied 08 May 2019

I hope below write up may give more clarity on the provisions of Payment of Gratuity Act 1972 (Amended)”

Under the provisions of the Payment of Gratuity Act 1972 (Amended), gratuity is a statutory obligation on the shoulders of the employer to make the payment of Gratuity to his employees as soon as it becomes payable (Refer Sub Section (2) of Section 7 to the Act).

Applicability

Compliance of this act is applicable to all organizations such as a factory, mine, oilfield, port, railways, plantation, shops, establishments or Educational institution having 10 or more employees on any day in the preceding 12.

Determination of Gratuity Amount

The amount of Gratuity payable to an employee on his exit from service, according to “The Payment of Gratuity (Amendment) Act 2018 ”, in force at present, is:-

(Wages of the employee at the time of exit) x (15/26) x (Number of Years of Service at the time of exit)

This is subject to a ceiling limit of 20,00,000/- effective from 29.03.2018.

Conditions for payment of Gratuity

Gratuity is payable to an employee on exit from service after he has rendered continuous service for not less than five years:

(a) On his superannuation

(b) On his resignation

(c) On his death or disablement due to injury or disease.

In the case of (c) vesting condition of 5 years does not apply.

Gratuity Benefits depends upon the last drawn monthly wages and is linked to the length of service, normally it goes on increasing from the time when the employee joins service and the time of his exit from service

Provisions for Employer under Payment of Gratuity Act 1972 (Amended)”

Section 7 of the Act has kept obligation for payment of gratuity act on the shoulders of the employer, few provisions of the act are listed below:-

1. As soon as Gratuity becomes payable, it employers responsibility to determine the amount of gratuity and inform it to the employee in writing (Refer Sub-Section 2 of Section 7 of the Act).

2. The employer shall arrange to pay the amount of gratuity within 30 days from the date when it becomes mandatory. (Refer Sub-section 3 of Section 7 of the Act).

2. If the amount of gratuity is not paid within 30 days then the amount of gratuity and simple interest will be paid by the employer to the employee for the duration when the payment is not made to the employee. (Refer Sub-section 4 of Section 7 of the Act).

Accounting of Gratuity by the Employer

The Companies Act regulates/prescribes the Accounting Standard/Accounting Standards for the accounting of payment of Gratuity in the Financial Statements of different organizations. The compliance of Accounting Standard/standards is mandatory in nature.

The Institute of Chartered Accountants of India prescribes following Accounting Standard/standards for accounting of Gratuity by the companies:-

v Accounting Standard 15 (Revised 2005)

v Ind AS 19

For Accounting of Gratuity by Schools, The Institute of Chartered Accountant has issued Guidance note on Accounting by Schools (2005) or as amended at time to time.

Under the accounting preview, gratuity falls in the category of the defined benefit plan and is a post-retirement benefit. The nature of computation of post-retirement benefit is complex and hence Actuarial Valuation Certificate/ Report of an Actuary (Para 49 of AS 15 Revised 2005) forms the basis of accounting provisions of gratuity in the financial statement.

Income Tax Rules for Gratuity

Accounting provision of gratuity in Financial Statements/Balance Sheet is not allowed as a deduction under Section 40A(7) of Income Tax Act, 1961 (as amended time to time). The Section is produced below:-

“ (a) Subject to the provisions of clause (b), no deduction shall be allowed in respect of any provision (whether called as such or by any other name) made by the assessee for the payment of Gratuity to his employees on their retirement or on termination of their employment for any reason.

(b) Nothing in clause (a) shall apply in relation to any provision made by the assessee for the purpose of payment of a sum by way of any contribution towards an approved gratuity fund, or for the purpose of payment of any gratuity, that has become payable during the previous year.”

For gratuity payment management, the employer has the option to fund the liabilities for payment of gratuity by setting up an irrevocable trust approved in terms of part c of the fourth schedule to the income tax act, 1961.

The contributions made by the employer in such trust is allowed as a business expense under section 36 (1) (v) of the income tax act, 1961. This section is produced herein below:-

“ (a) any sum paid by any sum paid by the assessee as an employer by way contribution towards an approved gratuity fund created by him for the exclusive benefits of his employees under an Inrrecovable Trust.”

For more details in the above matter then you may contact us at 9211637063 or email your requirement at tikaramchaudhary @ gmail.com.

I have 10 years of experience in providing consultation and have a team of leading Finance professionals, Litigation Partners, Chartered Accountants, Company Secretaries & Heads of Insurance Companies. In my 10 years of experience I have given consultation to CFOs, Directors, Heads of HR, Finance and Tax Planning department of the Companies, spread in all sectors of the Indian Economy, in the Public & Private Sectors which covers areas of Manufacturing, Software, Technology, Electricity, Electronics, Call Centers, Banks, Educational Institutes, Schools, Universities, Hotels, Hospitals, Hospitality Companies, etc. etc.

We offer consultation for the following services:-

v Consultation for Traditional and Unit Linked Group Gratuity Schemes.

o Traditional Group Gratuity Schemes of LIC

o Unit Linked Group Gratuity Schemes of Private Insurance Cos.

v Consultation for Restructuring of Gratuity or Leave Encashment Policy.

o For Retention of Most Productive Employees.

o For Enhancement Productivity and Liability Management.

v Consultation for all types of Business Valuations

o Actuarial Valuations

o Capital Gain Valuations

o Property Valuations

o Machinery Valuations

o Shares Valuations

v Consultation for Employee Retention Schemes, Retirement Investment in Annuities, Marine Insurances, EAR Insurance, Corporate Property, and Fire Insurances.

Tikaram Chaudhary

Group Gratuity Trust Fund Consultant

Office Address : R 11, F/F, R Block, Vikas Nagar, New Delhi -110059

Mobile Number : 9211637063

Email Id : gratuityconsultant @ gmail.com

Blog: https://gratuityconsultant.blogspot.com

Website: https://gratuity-trust-fund-consultant-in-delhi-ncr.business.site/

LinkedIn Profile : https://www.linkedin.com/in/tikaram-chaudhary-a5727848/

(All Consultancy Services provided by us are subject to terms & conditions will be stated when a consultation job is accepted.)

Tikaram Chaudhary (Founder of Gratuity Trust Fund Consultant) (2187 Points)
Replied 02 November 2019

Gratuity being an important retirement benefit to employees in the Indian context, is relevant for all organizations (i.e. MNC’s, Schools and Other business entities) having more than 10 employees . Since an employee sacrifices prime time of his life for the development, prosperity and betterment of his employer, employer pays his employee gratuity as a graciousness or gift to him, when he no longer serves him.

Gratuity Benefit falls in the category of “Defined Benefits” & amount of Gratuity payable to an employee on his exit from service, according to “ Payment of Gratuity Act 1972”, in force at present, is :-

(Wages of the employee at the time of exit) x (15/26) x (Number of Years of Service at the time of exit)

This is subject to a ceiling limit of 20,00,000/-.

Gratuity is payable to an employee on exit from service after he has rendered continuous service for not less than five years:

(a) On his superannuation
(b) On his resignation
(c) On his death or disablement due to employment injury or disease.

In case of (c) vesting condition of 5 years does not apply.

Gratuity is a statutory right of employee whoever completes 5 years in the same organization and the cost of Gratuity is to be borne by the Organization and not by an employee. Gratuity is a defined benefit nature and it Increases with the increase/changes in following:-

(a) Past Service of Employee,
(b) Increase in wages of Employee,
(c) Change in Benefit Formula of the Gratuity Benefit due to the amendment in Act,
(d) Change in Ceiling Limit on Gratuity Benefits due to the amendment in the Act &
(e) Change in Vesting Condition for eligibility of Gratuity Benefits due to the amendment in the Act.
(f) Change in applicability of compulsory insurance for Gratuity by State Governments due amendment in the act. (State of Andhra Pradesh notified about the compulsory insurance for Gratuity under Andhra Pradesh Compulsory Gratuity Insurance Rules, 2011vide Lr.No.M1/8842/2010, dated: 04.12.2010 from the Commissioner of Labour, Andhra Pradesh and remains un-notified for rest of India).

Applicability of compulsory insurance for Gratuity can be notified by the other State Governments because compulsory insurance of gratuity secures the gratuity benefits of employee even in case of bankruptcy of the company.

For the purpose of Accounting of gratuity benefits, Companies makes provision of Gratuity on accrual basis in their balance sheet to comply with the requirement of Accounting Standards issued by the Institute of Chartered Accountants of India. Compliance of these standards (i.e. AS 15 Revised 2005 and IndAS 19) is mandatory in nature. Generally services of an Actuary is taken for preparation of actuarial report under Gratuity Plan for compliance of AS 15 Revised 2005 and Ind AS 19 by the company’s annual basis at the end of each financial year.

Gratuity provision made in the balance sheet only suffice the requirement for compliance of Accounting Standard 15 (Revised 2005) but it is not allowed as deduction (Refer Section 47A (7) of Income Tax Act 1961)

For achieving the tax benefits under Section 36(1)(v) for contribution of gratuity equivalent to gratuity provision in the balance sheet based on actuarial report (Refer Circular : No. 30(XLVII-18), dated 30-11-1964 for clarification for Rule 103 for Initial Contribution of Income Tax Rules 1962), companies requires to create an Approved Gratuity Trust in terms of Part C of The Fourth Schedule of Income Tax Act, 1961

Section 36(1)(v) of Income Tax Act, 1961 reads as under :-

“any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by him for the exclusive benefit of his employees under an irrevocable trust”

An approved gratuity trust investment is either “Self Managed by the Trustee” or “Managed by the Insurance Company”.

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 :-

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.

Board Resolution for an Approved Gratuity Trust - Once the actuarial valuation certificate for accrued liability of gratuity is received from the Actuary. Management or Society of Organization with consultation of Gratuity Trust Fund Consultant can decide the Corpus of Investment into the Gratuity Fund of an Approved Gratuity Trust & A board resolution is passed by the Management of the Organization to form a Irrevocable Trust for Gratuity Fund.

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.

4. 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.

5. 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 establishment of Gratuity Trust requires in-depth knowledge of various rules/regulations and expertise. We have a team-leading Professionals, Litigation Partners, Chartered Accountants, Company Secretaries & Heads of Insurance Companies having decades of experience in providing their services to our clients spread in all sectors of the Indian Economy, in the Public & Private Sectors which covers areas of Manufacturing, Software, Technology, Electricity, Electronics, Call Centers, Banks, Educational Institutes, Schools, Universities, Hotels, Hospitals, Hospitality Companies, etc. etc.

We offer paid online/offline consultation for the following services:-

Consultation for Complete Guidance for Formation of a New Approved Irrevocable Gratuity Trust,
Consultation for Documentation requirement for Approval of New Gratuity Trust from Authority,
Consultation for Group Gratuity Schemes of LIC, SBI, HDFC and Bharati Axa,
Consultation for Support Services for Annual Accounting of Trusts,
Consultation for Investment Advisory for Privately Managed Gratuity Trusts,
Consultation for Support Services for compliance of AS 15 (Revised 2005) by Gratuity Trusts,
Consultation for Support Services for compliance of IndAS 19 by Gratuity Trusts,
Consultation for Support Services for compliance of IAS 19 (Revised 2011) by Gratuity Trusts

For more details in the above matter you may contact me at or call me at 9211637063

Tikaram Chaudhary (Founder of Gratuity Trust Fund Consultant) (2187 Points)
Replied 19 January 2021

Our Firm “Gratuity Trust Fund Consultant” is engaged in providing to Consultancy Services to Public Sector, Private Sector and Multinational Companies for formation of Gratuity Funds as provisions of Part C of The Fourth Schedule of Income Tax Act 1961.

The most important tax benefit of such Gratuity Fund to Companies is to get Tax Benefits under Section 36 (1) (v) of the Income Tax Act 1961, which is not available to when company made provision of Gratuity Liability in the Balance Sheet (Refer Section 47A (7) of Income Tax Act 1961).

We have almost 12 years of experience in providing above Consultancy Service. The details of Consultancy Services is as under: -

A. Formation of a New Approved Irrevocable Gratuity Trust.
B. Investment of Trust Money as per Income Tax Rules 1962.
C. Drafting of Board Resolutions Trust Deed, Trust Rules, Applications.
D. Approvals of Trust in terms of Part C of Schedule IV from Income Tax Department in following cases :-

i. Approvals for New Gratuity Trust or Group Gratuity Scheme
ii. Approvals for Change in Trust Deed
iii. Approvals for Change in Trust Rules
iv. Approvals for Change in Object of Trust
v. Approvals for Change in Trustees
vi. Approvals for winding up of Trust due to winding up of the Company
vii. Approvals for amalgamation with another fund due to merger/acquisition of Company

In case of any of requirement, you may send email at info @ gratuitytrustfund.com

Tikaram Chaudhary (Founder of Gratuity Trust Fund Consultant) (2187 Points)
Replied 27 February 2021

Our Firm “Gratuity Trust Fund Consultant” is engaged in Providing Online/Offline Advisory Services from last 12 years to Multinational Companies Operating in India, Public Sector Companies, Private Limited Companies, Limited Companies & Educational Organizations for Formation of Gratuity Trust & Related Services. Our Advisory Services Includes the following Information for Companies: -

1. Why Payment of Gratuity to Employee is mandatory for Companies as per Statutory Provisions of Payment of Gratuity Act, 1972 or Chapter V of Social Security Code 2020?
2. What are the factors that causes exponential Increase in Gratuity Liability?
3. What are the Options available to company for discharging the Gratuity Liability?
4. What are Tax benefits available to companies in various Options for Gratuity Liability?
5. Why Compulsory Gratuity Insurance is mandatory for Company?
6. Why Gratuity Trust is preferred option by Companies?
7. What are Advantages and Disadvantages of Formation of Gratuity Trust?
8. What is the Process of Formation of Gratuity Trust?
9. How vetting of various documents for Formation and Approval from CIT is done for Gratuity Trust?
10. What are the Provisions prescribed in Income Tax Act 1961 and Income Tax Rule 1962 for Formation of Gratuity Trust?
11. Why Gratuity Trust is formed and Approval is required from the CIT (Commissioner of Income Tax) as per provisions of Part C of Fourth Schedule of Income Tax Act, 1961 for making investment into a Group Gratuity Scheme of Insurance Companies?

For more details you may visit or website www.gratuitytrustfund.com

Tikaram Chaudhary (Founder of Gratuity Trust Fund Consultant) (2187 Points)
Replied 13 February 2024

Karnataka Government becomes the 3RD State to notify the requirement of Compulsory Gratuity Insurance for fulfillment of provisions of following :-

1. Sub-Section (2) & (4) of Section 4A of The Payment of Gratuity Act, 1972,

2. Subsection (5) of Section 2 Income Tax Act 1961,

3. Part C of Fourth Schedule of Income Tax Act, 1961

4. Rule 98-111 of Income Tax Rule, 1962

5. Chapter II of Indian Trust Act, 1882

6. AS 15 (Revised 2005) & IndAS 19

7. Insurance Act, 1938

The Government of Karnataka has notified above notification to ensure that there will be no default in terms of Payment of Gratuity to Private Sector employees even in case of Bankruptcy of Company as this notification specified that “Employer shall at all times maintain the gratuity trust and gratuity fund, as an Irrevocable System”

The gazetted notification is attached herewith for your kind perusal.

The Karnataka Government has notified the above Rules called “Karnataka Compulsory Gratuity Insurance Rules, 2024 (hereinafter referred as KCGIR, 2024)” on 10th January 2024. The last date for completion of compliance of KCGIR, 2024 is 09.03.2024 (i.e. 60 Days after date of notification).

Our firm GTFC - Gratuity Trust Fund Consultant has provided the end to end Consultation Services to more than 1000 Indian and Multinational Companies spread in PAN India in all Sectors of Indian Economy for Formation of Approved Gratuity Fund under Irrevocable Trust and mandatory requirements for employers to obtain insurance for the payment of gratuity to eligible employees and ensure compliance with the provisions of the Payment of Gratuity Act, 1972.

Our Consultation Services covers all the aspects (i.e. Legal, Actuarial, Insurance, Investment and Accounting) of getting the Valid Insurance within the stipulated timeline for implementation of Karnataka Compulsory Gratuity Insurance Rules, 2024. Our consultation covers:-

1. Consultation for Assessment for Applicability of KCGIR, 2024 on the establishment,

2. Consultation for Actuarial Valuation for Assessment of Gratuity Liability as per AS 15 (Revised 2005)/IndAS 19 for Initial Contribution and Annual Compliance in Balance Sheet,

3. Consultation for Formation Approved Gratuity Fund under Irrevocable system as prescribed in the KCGIR, 2024,

4. Liaison with the Leading Insurance Companies for getting the Valid Insurance like :-

a. Life Insurance Corporation of India (LIC)

b. SBI Life Insurance Company Limited

c. Pramerica Life Insurance Limited

d. Bajaj Allianz Life Insurance Co. Ltd

e. ICICI Prudential Life Insurance Company Limited

5. Consultation for Registration of Gratuity Trust in sub-registrar office and thereafter Registration of Establishment in Form I or FORM II as prescribed in KCGIR, 2024,

6. Consultation for Vetting Deed of Variations for Change in no of Trustee required by companies with Existing Approved Gratuity Fund under Irrevocable Trusts,

7. Consultation for Vetting of Application prescribed u/s Rule 109 of Income Tax Rule 1962 & Documents to obtain the CIT Approval as per provisions of Part C of Fourth Schedule of Income Tax Act, 1961,

For more details in the matter or any requirement for formation of the Gratuity Trust, you may connect us at tikaramchaudhary @ gratuitytrustfund.com