Insolvency N Gst Professional

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Dear All, As my company is new and it has more than 500 employees. After reading so many articles and payment of gratuity act i have found that it is mandatory to take compulsory insurance or creating fund. But i am not clear about the fact, is it mandatory to book provision of gratuity on yearly basis and take LIC gratuity scheme as my employees are not eligible for the gratuity. Even our has not completed 5 years.
Every Employer shall obtain an insurance, for his liability towards payment of gratutity under section 4A of payment of Gratutity Act 1972, form LIC or other prescribed insurance company.
Section 4A is given below in details.

(1) With effect from such
date as may be notified by the appropriate Government in this behalf, every
employer, other than an employer or an establishment belonging to, or under the
control of, the Central Government or a State Government, shall, subject to the
provisions of sub-section (2), obtain an insurance in the manner prescribed,
for his liability for payment towards the gratuity under this Act, from the
Life Insurance Corporation of India established under the Life Insurance
Corporation of India Act, 1956 (31 of 1956) or any other prescribed insurer :
Provided that different dates may be appointed for different establishments or
class of establishments or for different areas.
(2) The appropriate
Government may, subject to such conditions as may be prescribed, exempt every
employer who had already established an approved gratuity fund in respect of
his employees and who desires to continue such arrangement, and every employer
employing five hundred or more persons who establishes an approved gratuity
fund in the manner prescribed from the provisions of sub-section (1).
(3) For the purpose of
effectively implementing the provisions of this section, every employer shall
within such time as may be prescribed get his establishment registered with the
controlling authority in the prescribed manner and no employer shall be
registered under the provisions of this section unless he has taken an
insurance referred to in sub-section (1) or has established an approved
gratuity fund referred to in sub-section (2).
(4) The appropriate
Government may, by notification, make rules to give effect to the provisions of
this section and such rules may provide for the composition of the Board of
Trustees of the approved gratuity fund and for the recovery by the controlling
authority of the amount of the gratuity payable to an employee from the Life
Insurance Corporation of India or any other insurer with whom an insurance has
been taken under sub-section (1), or as the case may be, the Board of Trustees
of the approved gratuity fund.
(5) Where an employer
fails to make any payment by way of premium to the insurance referred to in
sub-section (1) or by way of contribution to an approved gratuity fund referred
to in sub-section (2), he shall be liable to pay the amount of gratuity due
under this Act (including interest, if any, for delayed payments) forthwith to
the controlling authority.
(6) Whoever contravenes
the provisions of sub-section (5) shall be punishable with fine which may
extend to ten thousand rupees and in the case of a continuing offence with a
further fine which may extend to one thousand rupees for each day during which
the offence continues.
Explanation : In this
section “approved gratuity fund” shall have the same meaning as in clause (5)
of section 2 of the Income-tax Act, 1961 (43 of 1961).
This is the rule position.
Whether your employees have completed 5 years or not, it does not matter.
You need to take insurance coverage for future payment of gratuity by paying appropriate premium to insurance company.
I am sure your state govt would have notified the requirement of compulsory insurance.Enlightened companies need to ensure proper arrangement for gratuity to employees.

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