Streamlined Gratuity Planning

Streamlined Gratuity Planning

  • Plan, provision, and fund your organisation's gratuity liability correctly - ensuring employees receive their statutory entitlement on time while your business manages the financial obligation efficiently

Custom packages available starting from

₹1,999/-

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Here's How It Works

Step 1

Gratuity Liability Assessment

Gratuity Liability Assessment

Step 2

Actuarial Valuation (AS 15 / Ind AS 19)

Actuarial Valuation (AS 15 / Ind AS 19)

Step 3

Scheme Selection & Setup

Scheme Selection & Setup

Step 4

Annual Provisioning & Compliance

Annual Provisioning & Compliance

What Our Clients Say

“Lawxygen provides top-tier support. Registration timelines were strictly followed with full transparency.”

Rahul Verma

Rahul Verma

Director, TechNexus

Here's What You'll Need

Plan, provision, and fund your organisation's gratuity liability correctly - ensuring employees receive their statutory entitlement on time while your business manages the financial obligation efficiently.

  • Document
  • Notes / Format
  • Employee Master Data
  • Name, date of joining, date of birth, designation, and current basic salary + DA of all employees
  • Service Records
  • Employment history - dates of joining, promotions, salary changes - for accurate liability calculation
  • Prior Gratuity Provisions (if any)
  • Previous actuarial valuations and accounting provisions for comparison and continuity
  • Financial Statements
  • Last 2 years of audited financial statements - for actuarial valuation context
  • Group Gratuity Policy Documents (if existing)
  • Current Group Gratuity scheme documents, premium payment records, and fund balance statements

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Overview - gratuity planning Registration

What is it?

Gratuity is a statutory payment under the Payment of Gratuity Act, 1972 - payable to an employee who has completed 5 years of continuous service, upon resignation, retirement, death, or disablement. The gratuity amount is calculated as: (Last drawn basic salary + DA) × 15/26 × Number of years of service.

Who is covered?

The Payment of Gratuity Act applies to every establishment employing 10 or more employees. Once applicable, gratuity obligations continue even if employee count falls below 10. Every employee who has completed 5 years of continuous service is entitled to gratuity - regardless of reason for leaving (except termination for misconduct).

Gratuity calculation

Formula: (Last drawn Basic + DA) ÷ 26 × 15 × Years of service. Maximum gratuity payable: ₹20 lakhs (as per the Payment of Gratuity (Amendment) Act, 2018). Gratuity is tax-exempt up to ₹20 lakhs for private sector employees.

Gratuity funding options

Self-funded (unfunded): Employer pays from own funds when due. Group Gratuity Scheme (funded): Employer contributes annually to an LIC or insurance company trust - accumulates a fund that pays gratuity when due. Funded schemes provide a tax deduction on annual contributions under Section 36(1)(v) of the Income Tax Act.

Benefits - Benefits of Company Registration Online Using Lawxygen

Who Usually Requires This?

The Gratuity Planning solution matches perfectly with these profiles:

  • Profile
  • Why It Applies
  • Profile
  • Why It Applies
  • Businesses with employees completing 4–5 years of service
  • As employees approach the 5-year mark, the gratuity liability crystallises. Proactive gratuity planning - provisioning and funding - prevents the cash flow shock of large one-time payments.
  • Companies undergoing M&A due diligence
  • Gratuity liability is an employee benefit obligation that must be disclosed in financial statements and assessed during M&A due diligence. Unprovisioned or underfunded gratuity liability is a material financial risk for the acquirer.
  • Businesses that have never provisioned for gratuity
  • Many small and mid-sized businesses have never accounted for gratuity liability in their books. This creates a growing off-balance-sheet liability that surfaces unexpectedly when long-serving employees exit.
  • Companies wanting to set up a Group Gratuity scheme
  • A funded Group Gratuity scheme (through LIC or approved insurance companies) provides a tax deduction on contributions, ensures funds are available when employees exit, and eliminates the cash flow risk of large unfunded payments.

How It Works

Execution is straightforward. Hand over the details and relax.

Consultation Request

Drop your inquiry.

Data Preparation

Our agents format the forms via robust checks.

Execution

Final approvals fetched from the regulating authorities.

Expected Additional Levies

  • Filing Fees to Government
  • E-Stamp Duties according to state norms
  • Processing Levies based on capital limits

Core Advantages to Remember

Avoid Penalties

Better Market Position

Standardized Documentation

FAQ's