Summary: Effective management and administration of a gratuity trust involve a series of ongoing activities to ensure compliance and efficiency. Key management tasks include meticulous record-keeping of all financial transactions: bank dealings, company contributions to the trust, employee claims (including calculations and settlements), and investment records with their accrued returns. Additionally, the trust must maintain accurate records of employee admissions and terminations from the gratuity scheme. Coordination with insurers is also essential for claim settlements, fund transfers, policy surrenders, and related documentation. On the administration side, regular trustee meetings must be conducted, requiring preparation of agendas and minutes. Continuous updates on amendments to the Payment of Gratuity Act and Income Tax Act are necessary to ensure adherence. Furthermore, awareness sessions for employees should be held to inform them about the scheme. Ensuring compliance with labor laws, particularly the Payment of Gratuity Act, 1972, and other relevant statutes, is a critical administrative responsibility. Beyond these regular tasks, annual activities include completing the trust’s audit and income tax return filing, along with an actuarial valuation to determine the gratuity fund’s liability.
Once a gratuity trust is set up then next question comes in the mind of the company’s management regarding managing and administering the trust.
The following activities to be done on regular basis for the trust management and administration:
Activities for managing the gratuity trust efficiently:
Maintaining the bank records for the bank transactions of the trust and accounting for the same
Maintaining records of contributions made by the company in the trust account
Maintaining records of claims made by the employee, its workings and settlement of claims during the year
Maintaining records of investments made out of the contribution and its accrued return
Maintaining records of employees who are part of the scheme and admission and termination of employees from the said scheme
You need to coordinate with the insurer for claim settlement, transfer of funds, surrender of gratuity policy and prepare documentation for the same
Activities to be done under trust administration:
Conduct trustee meetings
Prepare the agenda and other papers for trustee meetings
Draft minutes of trustee meetings
Keep yourself continuously updated on amendments with respect to payment of gratuity and income tax act
Conduct awareness sessions for employees
Ensure compliance with labor laws such as the Payment of Gratuity Act, 1972, along with other relevant statutes
Apart from above activities you need to get the annual audit and IT return filing done for the gratuity trust. An actuarial valuation to be conducted annually to calculate the liability of gratuity fund.
Author Bio
Can u please elaborate about how accounts are maintained &whether audit is compulsorily to be done and how income tax return is to be filed