A Group Gratuity Trust is the dedicated, employer-funded irrevocable trust through which Indian companies discharge their gratuity liability under the Payment of Gratuity Act, 1972 — providing a tax-efficient and ring-fenced vehicle for funding statutory and supplementary gratuity to employees. To unlock the tax benefits — employer contribution deductible under Section 36(1)(v), investment income exempt under Section 10(25)(iv), and gratuity payouts taxable in employees' hands under Section 10(10) — the trust must be registered as an Approved Gratuity Fund by the Commissioner of Income Tax (CIT) under Rule 4 of Part C of the Fourth Schedule read with Section 2(5) and Section 36(1)(v) of the Income-tax Act 1961.
Once approved, a Group Gratuity Trust enters a year-on-year annual compliance cycle covering trust accounting, statutory audit, actuarial valuation under AS 15 (Revised) / Ind AS 19, contribution sufficiency review under Rule 103 of Income-tax Rules, investment compliance with Rule 67 of the Income-tax Rules and the specified investment pattern, ITR filing under ITR-7, tax audit / Form 3CD reporting at the employer level, TDS reconciliation on gratuity payouts crossing Sec 10(10) limits, and trustee meetings, minutes, and resolutions. Our annual compliance services for group gratuity trusts help employers, trustees, and HR / Total-Rewards leaders run a clean, audit-ready compliance program — from books of account, bank reconciliation, member records, and contribution working, to trustee secretariat, statutory audit liaison, actuarial coordination with valuers, ITR-7 filing, and CIT-Exemptions correspondence.
Trusts using LIC's Group Gratuity Cash Accumulation Scheme — premium contribution working, LIC fund-value reconciliation, claim processing, and AS 15 actuarial linkage.
Employer-managed gratuity trusts investing directly under Rule 67 — investment compliance audit, mark-to-market accounting, and CIT-Exemptions reporting.
Trusts with multiple insurance / fund managers (HDFC Life, ICICI Pru, SBI Life, Bajaj Allianz, Tata AIA) — multi-manager reconciliation and consolidated annual compliance.
Listed entity gratuity trusts requiring quarterly AS 15 / Ind AS 19 actuarial true-up, audit committee reporting, and SEBI LODR financial-statement disclosures.
India arms of MNC parents needing IFRS / US GAAP gratuity linkage — local approved-fund compliance plus parent-pack actuarial schedules and disclosures.
End-to-end setup of a new approved gratuity fund — trust deed drafting, trustee constitution, CIT approval under Rule 4, PAN, bank account, and first-year compliance.
A gratuity fund that has been and continues to be approved by the Principal Commissioner / Commissioner of Income Tax under Rule 4 of Part C of the Fourth Schedule.
Contribution by an employer to an approved gratuity fund created exclusively for the benefit of employees is allowable as a deduction in computing business income, subject to conditions.
A mere provision for gratuity is not deductible — only contribution to an approved gratuity fund or actual gratuity paid is deductible. Drives the case for a properly approved trust.
Income received by trustees on behalf of an approved gratuity fund is fully exempt from tax — preserving compounding of contributions and investment returns inside the trust.
Gratuity received by employees from an approved gratuity fund is exempt up to the prescribed limit (currently ₹20 lakh) — beyond which it becomes taxable in the employee's hands.
Trust funds must be invested in accordance with the prescribed pattern — central / state government securities, approved bonds, units, equity (within limits) — failure can lead to withdrawal of approval.
Caps on annual ordinary contribution (8.33% of salary) and rules for amortising initial contribution where past service liability needs catch-up funding.
Annual actuarial valuation by a Fellow of the Institute of Actuaries of India (FIAI) — projecting unit credit method, demographic / financial assumptions, and OCI / P&L recognition.
Maintenance of trust books — receipts & payments, income & expenditure, balance sheet — bank reconciliation, member-wise contribution ledger, and investment schedule.
Independent audit of the gratuity trust's financial statements — opining on contribution receipts, investment compliance, claim disbursements, and Rule 67 / Rule 103 adherence.
End-to-end coordination with the appointed actuary — data pack preparation (demographics, salary, accruals), assumption review, draft / final report, and AS 15 / Ind AS 19 disclosure.
Investment pattern testing under Rule 67, mark-to-market accounting, FIMMDA / NSE pricing, custodian / demat reconciliation, and breach remediation reporting.
Annual ITR-7 filing for the approved gratuity trust — Sec 10(25)(iv) exemption, Schedule VC (voluntary contributions), Schedule LA, audit report, and refund / DTAA tracking.
Employer-side Form 3CD Clause 26 reporting — contribution to approved gratuity fund, Sec 36(1)(v) deduction, Sec 40A(7) bar, and reconciliation with trust books.
Reconciliation of gratuity disbursements with Sec 10(10) limit, employer TDS u/s 192 on excess, employee Form 16 alignment, and trust-level deduction certificates where required.
Trustee meeting agenda, board pack, MIS dashboard, minutes, resolutions, and statutory register maintenance — trustee training and induction support for new trustees.
Member master maintenance, joiners / leavers / death cases, beneficiary nominations, claim processing audit, and turnaround time (TAT) compliance with HR-team SLA.
Response to CIT-Exemptions notices, fresh approvals on trust deed amendment, jurisdiction / migration issues, and approval continuity audits where the file is reviewed.
Liaison with the company's statutory auditor — schedule preparation, AS 15 / Ind AS 19 disclosure tie-out, contribution sufficiency representation, and management representation letter.
Annual funding strategy review — surplus / deficit position, contribution holiday analysis, fund-manager performance, and benefit design / ceiling alignment recommendations.
Every year-end requires trust audit, actuarial valuation, ITR-7 filing, Form 3CD Cl 26 reporting, and trustee meetings — best handled with a single integrated specialist.
Statutory auditor flagging under-funding of gratuity, Sec 40A(7) provision disallowance, or AS 15 / Ind AS 19 disclosure gaps — needs urgent remediation.
Notice from CIT (Exemptions) on Rule 67 investment breach, Rule 103 contribution excess, or trust deed deviation — defence and remediation needed to retain approval.
Switching insurer / fund manager, hybrid model, or moving from LIC scheme to self-managed — accounting transition, trustee resolutions, and CIT communication.
Change of trustees due to resignation, retirement, or restructuring — trust deed supplementary, KYC, bank update, and CIT-Exemptions intimation.
Group M&A, demerger, or business transfer — gratuity trust split, member transfer, asset apportionment, and parallel approvals before CIT-Exemptions.
Government revision of Sec 10(10) gratuity exemption ceiling — TDS recompute, Form 16 update, employee communication, and trust documentation alignment.
Significant actuarial surplus / deficit, large past-service liability, or cash-flow constraint — funding strategy review with Rule 103 compliance and contribution roadmap.
Member master, salary data, contribution working, investment statements, bank reconciliation, claim registers, and prior-year working papers.
Trust books closure, bank / investment reconciliation, statutory audit fieldwork, and reporting on Rule 67 / Rule 103 / trust deed compliance.
Actuarial data pack, valuation report, ITR-7 preparation, Form 3CD Cl 26 working at the employer level, and tie-out with statutory audit.
ITR-7 filing, audit report upload, trustee MIS, board pack to audit committee, and CIT-Exemptions correspondence where required.
Quarterly trustee meeting calendar, member-claim TAT review, fund-manager performance review, and proactive deviation management.
Partner with our gratuity trust specialists for end-to-end annual compliance — trust audit, AS 15 / Ind AS 19 actuarial valuation, Rule 67 investment audit, ITR-7 filing, Form 3CD Cl 26 support, and trustee secretariat for FY 2026–27.
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