What is Compulsory Gratuity Insurance, How it is different from other Insurances and why companies procure it before closure of each Financial Year ?
In this post, I will try to elaborate about Compulsory Gratuity Insurance :-
Gratuity Benefits are governed by the Payment of Gratuity Act, 1972
Section 4A of the Payment of Gratuity Act, 1972 regulates the provisions of Compulsory Gratuity Insurance and Power of Notification of this Section is with State Governments and Central Government. After enactment of the Payment of Gratuity Act, 1972, 3 States notified this Section and The Details of the States and Years of Notifications are as under :-
Ist State : Andhra Pradesh : In Year 2011
2nd State : Telangana : Year 2016
3rd State : Karnataka : Year 2024
All Private Establishments (i.e. Private Sector Companies, Private Schools, Private Colleges, NGO’s ) in the above 3 State are required to : -
1. Get an Actuarial Report for assessment of Present Values of Gratuity Obligation and procure compulsory Gratuity Insurance under Approved Gratuity Fund under Irrevocable System,
2. Get their Companies registered with Deputy Labor Commissioner of their respective jurisdictions in prescribed Forms (i.e. Form I, Form II & Form III etc. ) and,
3. Get approval for from Commissioner of Income Tax (CIT) in terms of Part C of Forth Schedule of Income Tax Act, 1961.
it is unnotified rest State & UT’s.
In view of taxation benefits available to establishments under Section 36 (1) (v) of the Income Tax Act 1961, which is not available to when company make provision of Gratuity Liability based on Actuarial Report in the Balance Sheet under “Pay as you go Option” (Refer Section 47A (7) of Income Tax Act 1961). Companies in other states and UT's voluntarily opt for the Compulsory Gratuity Insurance before closure of Financial Year.
Recent development w.r.t. implementation of Security Security Code 2020 by Central Government before 31.03.2025 will made the COMPULSORY GRATUITY INSURANCE applicable for all establishments (i.e. Private Sector Companies, Private Schools, Private Colleges, NGO’s ) in other States & UT’s. because Section 57 (1) of the Drafts of the Social Security Code 2020 has the similar provision as given in Section 4A of the Payment of Gratuity Act, 1972.
In case of any query or requirement for consultation in the above matter, you may send a email at info@gratuitytrustfund.com or contact us at 011-45261651, 9211637063.
From India, Delhi
5In this post, I will try to elaborate about Compulsory Gratuity Insurance :-
Gratuity Benefits are governed by the Payment of Gratuity Act, 1972
Section 4A of the Payment of Gratuity Act, 1972 regulates the provisions of Compulsory Gratuity Insurance and Power of Notification of this Section is with State Governments and Central Government. After enactment of the Payment of Gratuity Act, 1972, 3 States notified this Section and The Details of the States and Years of Notifications are as under :-
Ist State : Andhra Pradesh : In Year 2011
2nd State : Telangana : Year 2016
3rd State : Karnataka : Year 2024
All Private Establishments (i.e. Private Sector Companies, Private Schools, Private Colleges, NGO’s ) in the above 3 State are required to : -
1. Get an Actuarial Report for assessment of Present Values of Gratuity Obligation and procure compulsory Gratuity Insurance under Approved Gratuity Fund under Irrevocable System,
2. Get their Companies registered with Deputy Labor Commissioner of their respective jurisdictions in prescribed Forms (i.e. Form I, Form II & Form III etc. ) and,
3. Get approval for from Commissioner of Income Tax (CIT) in terms of Part C of Forth Schedule of Income Tax Act, 1961.
it is unnotified rest State & UT’s.
In view of taxation benefits available to establishments under Section 36 (1) (v) of the Income Tax Act 1961, which is not available to when company make provision of Gratuity Liability based on Actuarial Report in the Balance Sheet under “Pay as you go Option” (Refer Section 47A (7) of Income Tax Act 1961). Companies in other states and UT's voluntarily opt for the Compulsory Gratuity Insurance before closure of Financial Year.
Recent development w.r.t. implementation of Security Security Code 2020 by Central Government before 31.03.2025 will made the COMPULSORY GRATUITY INSURANCE applicable for all establishments (i.e. Private Sector Companies, Private Schools, Private Colleges, NGO’s ) in other States & UT’s. because Section 57 (1) of the Drafts of the Social Security Code 2020 has the similar provision as given in Section 4A of the Payment of Gratuity Act, 1972.
In case of any query or requirement for consultation in the above matter, you may send a email at info@gratuitytrustfund.com or contact us at 011-45261651, 9211637063.
From India, Delhi
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AP Compulsory Gratuity Insurance Rule 2011- Notification.pd f