Gratuity Guidance Needed for New Company: Are We Late on Filing Returns or Investments?

Our company was registered in April 2019. As of now, we haven't taken any steps regarding gratuity. Kindly suggest what we should do and if there are any late fees we need to pay. Please also refer to the respective Acts for guidance. Is there a due date for filing returns? When should we make investments in LIC or other trusts for gratuity?

Further to the valid points of the learned member, Mr. KM, please start collecting Gratuity nomination forms (FORM F) from all employees and store them in a separate file for future use. You can utilize the services of LIC's Group Gratuity Scheme, which will reduce the liability of the employer considerably, subject to the payment of a nominal premium to LIC. Your decision on this should be based on the count of employees and also considering your future expansion of manpower.

Furthermore, you should display Form 'U' - Abstract of the Gratuity Act and Rules in your office premises in English and the local language where your office is situated.

Thank you for your valuable reply.

Sorry, we incorporated on April 18, not April 19. We have only 10 employees and 15 factory workers. We didn't account for or create a provision for gratuity as well. Kindly let us know how to proceed from the beginning under the Gratuity Act. Is there any late fee or interest payable?

Thank you.

There is no late fee involved. As per the Gratuity Law, a continuous service period of 5 years is a must. Accordingly, any employee who continues until the year 2023 in April or beyond will become eligible for Gratuity.

As an employer, if you are planning to make the payment by yourself, you have more time. However, if you want to enroll in the LIC Group Gratuity scheme, you need to follow the process. Please check with LIC regarding coverage with a retroactive date. There might be charges involved. You will be expected to provide additions/deletions of employees on a monthly basis to LIC.

Steps for Gratuity Planning and Implementation

The best option is to first have an in-house discussion with concerned officials and then decide which insurance company to approach. Meet with LIC of India officials who deal with group gratuity to obtain details such as financial implications. Similarly, gather information from other private players as well. Select the best option and proceed with gratuity planning and implementation.

It would be beneficial to read the Act and the rules made thereunder to get a fair idea of the compliances to follow. Being compliant with all laws is essential, and the new Wage Code is also likely to be implemented. It may seem difficult to comply with so many laws, but once you set up a system, things will fall into place.