Your employees have crossed the threshold of 10 persons. Under the Payment of Gratuity Act, 1972, you are now legally obligated to pay gratuity at the rate of 15 days wages for every completed year of service. Without a Gratuity Trust, this liability sits on your balance sheet as an undetermined future obligation, eroding your working capital and creating uncertainty in your financial statements. The smarter path is to set up an independent Gratuity Trust that receives employer contributions, invests them systematically, and pays out claims transparently. Under Section 2(13) of the Income Tax Act, 1961, an approved gratuity fund attracts exemption from income-tax on its income, making the trust a tax-efficient vehicle for both the employer and beneficiaries. KAMRIT Financial Services LLP handles the entire setup end to end: from drafting the trust deed under the Registration Act, 1908, to obtaining Income Tax approval under Rule 103 of the Income Tax Rules, 1962, to ensuring compliance with the Payment of Gratuity Act, 1972 and applicable state public trust legislation such as the Bombay Public Trusts Act, 1950. You receive a fully operational, board-approved Gratuity Trust with its own PAN, bank account, and compliance calendar.
What is Gratuity Trust Setup in India 2026?
A Gratuity Trust is a dedicated irrevocable trust created by an employer to receive, manage, and distribute gratuity payments to employees under the Payment of Gratuity Act, 1972. It is a separate legal entity from the employer company, governed by a trust deed registered under the Registration Act, 1908. When approved by the Commissioner of Income Tax under Section 2(13) read with Section 77 of the Income Tax Act, 1961, it becomes an Approved Gratuity Fund, meaning its corpus and income enjoy full income-tax exemption. The trust is managed by a Board of Trustees comprising both employer-nominated and employee-elected trustees, in proportions specified in the trust deed. An employer falling under the Payment of Gratuity Act, 1972 must display the Abstract of the Act (Form III) on the company notice board and pay gratuity within 30 days of an employee becoming eligible. A trust simplifies this by centralising fund management, actuarial valuation, and claim processing. The regulatory ownership sits with the Income Tax Department for tax approval and with the respective state government under applicable public trust statutes for registration. The minimum corpus contribution, actuarial valuation frequency, and investment norms for the trust fund are governed by rules framed under the Income Tax Act and the Payment of Gratuity Act combined.
Who needs this
Gratuity Trust Setup is not optional for every business. The legal triggers and thresholds below determine whether your organisation is eligible and, in many cases, obligated to set up this trust.
- Private limited or public limited company with 10 or more employees on any day during the preceding 12 months, as per Section 1(3) of the Payment of Gratuity Act, 1972
- Partnership firms and LLPs that employ 10 or more persons in the establishment, subject to applicable state notifications under the Act
- Societies and trusts that operate establishments with 10 or more employees, if the state government has extended the Act to such entities by notification
- Employer must have a valid PAN and current GST registration, as the trust requires separate PAN and a bank account linked to PAN
- Trust deed must be executed on non-judicial stamp paper of value prescribed under the Indian Stamp Act, 1899 of the respective state (typically Rs 100 to Rs 500 depending on state)
- Minimum three trustees are required for the Board, with at least one being a current employee of the organisation
- Employer contribution to the trust must be made at least once every financial year and actuarial valuation obtained annually
- The trust must be registered under the applicable state public trust Act if the state has enacted one, such as the Bombay Public Trusts Act, 1950 for Maharashtra
Documents required
The document checklist below covers every requirement from KAMRIT's initial intake to the final trust deed registration and Income Tax application. Missing documents are the single largest cause of delays in this filing.
- PAN card copies of all proposed trustees (minimum 3, maximum as per trust deed) with self-attestation
- Passport-size photographs (3 copies each) of all trustees for trust deed execution and bank account opening
- Company PAN card and Certificate of Incorporation issued by MCA under the Companies Act, 2013
- Memorandum and Articles of Association (MOA/AOA) or Partnership Deed or Trust Registration Certificate, as applicable
- Board Resolution in Form DIR-8 or a specific board resolution authorising the creation of the Gratuity Trust and appointment of trustees
- List of all eligible employees with dates of joining, current salary, and designation for actuarial valuation baseline
- Registered Office address proof of the trust (rental agreement, electricity bill, or property tax receipt not older than 3 months)
- Trust Deed on non-judicial stamp paper, drafted in accordance with the Registration Act, 1908, with objects clause covering gratuity management
- Form 15 (Application for Approval of Gratuity Fund) under Rule 103 of the Income Tax Rules, 1962 for Income Tax Commissioner approval
- Trustee declaration forms signed by each trustee accepting the appointment and declaring no disqualification under the Income Tax Act
- Trust bank account opening documents including KYC of all trustees as per RBI guidelines
- Previous actuarial valuation report or a fresh one commissioned before trust setup to determine the initial corpus contribution
How KAMRIT runs it, step by step
KAMRIT's engagement runs across six defined stages from intake to the trust receiving its Income Tax approval letter. Each stage has a specific deliverable and a KAMRIT relationship manager assigned to it.
- Intake and Eligibility Check. KAMRIT collects your Certificate of Incorporation, employee headcount data, existing gratuity payments history, and the proposed trustee list. We verify your employee count against the threshold under Section 1(3) of the Payment of Gratuity Act, 1972 and confirm that your state has a compatible public trust Act. If you have between 10 and 19 employees and the state has extended the Act to you, we flag any state-specific notifications required. This stage produces an Eligibility Assessment Report within 2 working days of receiving complete documents.
- Trust Deed Drafting and Trustee Board Finalisation. KAMRIT's legal team drafts the Trust Deed tailored to your organisation structure, covering objects, trustee appointment and removal, investment norms, claim procedure, and accounting standards. The deed is reviewed by your compliance officer and approved by the board before execution. It is then executed on non-judicial stamp paper in the presence of two witnesses. Under the Registration Act, 1908, the deed must be presented before the sub-registrar of assurances in the district where the trust is situated for registration within 4 months of execution. KAMRIT handles the sub-registration appointment and procedural filing.
- Trust PAN and Bank Account. After registration, KAMRIT applies for a separate PAN in the name of the Gratuity Trust through Form 49A or 49AA on the NSDL or Protean e-Gov portal. The trust PAN application is filed with the registered trust deed, trustee list, and registered address proof. Simultaneously, KAMRIT assists with opening a dedicated savings or current account for the trust at a scheduled commercial bank, using the registered deed, trust PAN, and trustee KYC. This step typically takes 5 to 7 working days post-registration.
- State Public Trust Registration. If your trust is situated in a state that has enacted public trust legislation such as the Bombay Public Trusts Act, 1950 (Maharashtra), the Rajasthan Public Trusts Act, 2012, or similar state statutes, KAMRIT files the Trust Registration application with the applicable Charity Commissioner or Registrar of Public Trusts. This includes filing Form A (devadasi notification), Form B (registration application), along with the registered trust deed, proof of address, trustee identity documents, and the prescribed registration fee. Timeline varies from 15 to 45 working days depending on the state and workload of the charity commissioner office.
- Form 15 Submission for Income Tax Approval. With the trust deed registered, PAN obtained, and bank account operational, KAMRIT prepares and files Form 15 under Rule 103 of the Income Tax Rules, 1962 before the Commissioner of Income Tax having jurisdiction over the trust. The application includes the trust deed, trustee details, actuarial valuation report estimating the gratuity liability, proposed investment policy for the trust fund, and audited financial statements of the employer entity. The Commissioner has 6 months to process the application under Rule 103(5). KAMRIT follows up with the CIT office and responds to any query or deficiency notice within 5 working days.
- Actuarial Valuation and Initial Corpus Setup. KAMRIT coordinates with a qualified actuary to produce the initial Gratuity Liability Valuation Report as per AS 15 (Revised) under the Companies (Accounting Standards) Rules, 2006. This determines the minimum initial corpus contribution the employer must transfer to the trust. KAMRIT prepares the board resolution for the initial contribution, assists in transferring the funds to the trust bank account, and ensures the first actuarial report is filed with the CIT along with Form 15. The trust is now fully operational, with a compliance calendar for annual actuarial valuation, ITR filing for the trust, and Form 15 renewal if required.
Timeline
From the date KAMRIT receives complete documents, the trust deed can be drafted within 3 to 4 working days. Registration before the sub-registrar typically takes 3 to 5 working days to get an appointment and complete the registration. Trust PAN issuance takes 15 to 20 working days from the NSDL or Protean portal. Bank account opening adds another 5 to 7 working days once PAN is available. State public trust registration, if applicable, is the most unpredictable stage, running 30 to 60 working days depending on the state and the local Charity Commissioner office. Form 15 processing by the Income Tax Commissioner takes up to 6 months by rule, though in practice well-prepared applications with complete actuarial documentation often receive approval in 3 to 4 months. The initial actuarial valuation and corpus transfer are completed within 15 working days of the trust deed registration. In total, a straightforward Gratuity Trust Setup with complete documentation and no state-level delays takes approximately 4 to 6 months end to end. KAMRIT controls its own stages tightly; regulator-controlled stages are where timelines can vary.
How our pricing compares
KAMRIT Financial Services LLP offers Gratuity Trust Setup starting at Rs 11,899, which is a comprehensive fee covering trust deed drafting, sub-registrar registration, PAN application filing, bank account assistance, and Form 15 preparation and submission. It excludes government registration fees, stamp duty (which varies by state, typically Rs 500 to Rs 5,000), charity commissioner filing fees (Rs 1,000 to Rs 2,500 in applicable states), actuarial valuation fees (charged separately by the actuary at Rs 15,000 to Rs 45,000 depending on employee headcount), and courier charges. IndiaFilings.com lists Gratuity Trust Setup starting at Rs 14,999, with additional charges for Form 15 filing and state registration. Vakilsearch quotes Rs 15,000 to Rs 25,000 depending on the number of employees and states involved. LegalRaasta.com offers a basic package at Rs 12,999 but charges extra for state public trust registration and Form 15 follow-up. ClearTax focuses on Income Tax filing and compliance for existing trusts but does not offer end-to-end trust formation. KAMRIT's pricing at Rs 11,899 is positioned below the market median while including Form 15 filing and multi-state support, making it the most cost-competitive option for businesses setting up a Gratuity Trust for the first time. The value difference is justified by KAMRIT's dedicated compliance dashboard, single-point relationship manager, and捆绑式 annual compliance renewal reminders at no extra charge for the first year.
Common mistakes KAMRIT avoids
The following errors are responsible for the majority of delayed or rejected Gratuity Trust applications. KAMRIT's process guards against each of them specifically.
- Setting up the trust with fewer than the minimum required trustees, causing the sub-registrar to reject the deed or the CIT to object in Form 15 review
- Filing Form 15 without a current actuarial valuation, triggering a deficiency notice and adding 45 to 60 days to the CIT processing time
- Using a trust deed template without state-specific amendments, leading to rejection under the Bombay Public Trusts Act, 1950 or equivalent state legislation in Maharashtra, Gujarat, or Rajasthan
- Failing to obtain a separate PAN for the trust, which makes the bank account and Income Tax approval application incomplete andunenforceable
- Not registering the trust under the applicable state public trust Act, resulting in ongoing non-compliance risk even after Income Tax approval
- Transferring the initial corpus without a board resolution, creating a discrepancy between the trust deed corpus clause and actual funds transferred
- Missing the annual actuarial valuation renewal, which is mandatory for companies reporting under AS 15 (Revised) under the Companies Act, 2013 and for Income Tax exemption continuity
- Failing to display Form III (Abstract of the Payment of Gratuity Act) on the company premises within 30 days of becoming liable under the Act, attracting penalties under Section 14