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GOVERNMENT OF KARNATAKA

No: LD 397 LET 2023

Karnataka Government Secretariat,

Vikasa Soudha,

Bangalore, dated: 10/01/2024

NOTIFICATION

In exercise of the powers conferred by sub-section (4) of Section 4A of the

Payment of Gratuity Act, 1972 (Central Act No. 39 of 1972), the Government of

Karnataka hereby makes the following rules, namely;-

Rules

1. Title and Commencement.- (1) These rules may be called the Karnataka

Compulsory Gratuity Insurance Rules, 2024.

(2) They shall come into force from the date of their publication in the Official

Gazette.

2. Definitions.- (1) In these rules unless the context otherwise requires,-

(a) “Act” means the Payment of Gratuity Act, 1972 (Central Act No. 39 of

1972);

(b) “employer” means an employer other than employer of an

establishment belonging to or under the control of Central Government

or State Government;

(c) “form” means a form appended to these rules;

(d) “nomination” means nomination made under section 6 of the Act; and

(e) “section” means a section of the Act.

(2) The words and expressions used and not defined in these rules but defined

in the Insurance Act, 1938 (Central Act No. 4 of 1938), Life Insurance Corporation

¨sÁUÀ – 4ಎ

Part – IVA

, 10

, 2024(

, 20

, 1945)

BENGALURU, WEDNESDAY, 10, JANUARY, 2024(PUSHYA, 20, SHAKAVARSHA, 1945)

. 18

No. 18

2

Act, 1956 (Central Act No. 31 of 1956) the General Insurance Business

(Nationalization) Act, 1972 (Central Act No. 57 of 1972), the Insurance Regulatory

and Development Authority Act, 1999 (Central Act No. 41 of 1999), the Payment of

Gratuity Act, 1972 (Central Act No. 39 of 1972) and the Payment of Gratuity

(Karnataka) Rules, 1973 shall have the same meanings respectively assigned to

them in the said Acts.

3. Obtaining Insurance for Payment of Gratuity.- (1) Every new employer

shall subject to fulfillment of sub-section (2) of Section 4A of the Act, within a period

of thirty days from the date on which these rules becomes applicable to such

establishment shall obtain valid insurance policy in the manner as prescribed

under sub-section (4) of Section 4A of the Act for his liability for payment towards

the gratuity to all eligible employees under the Act from the Life Insurance

Corporation of India or any other insurance company incorporated in accordance

with the provisions of the Insurance Act,1938(Central Act No. 4 of 1938), the

Companies Act, 2013 (Central Act No. 18 of 2013), the Insurance Regulatory and

Development Authority of India Act,1999 (Central Act No. 41 of 1999) or any other

law which is applicable to the insurance company in this regard.

(2) The employer of an establishment which is in existence at the time of

commencement of these rules shall obtain valid insurance policy within sixty days

from the date of commencement of these rules.

(3) The employer of the establishment who has obtained valid insurance

policy shall make all payments by way of premium to the insurance company and

renew the same periodically and intimate the same to the Controlling Authority

within fifteen days from the date of renewal of the policy. The employer shall initiate

the process of payment of premium and renewal of policy before the lapse of the

policy.

(4) Every employer shall exercise all due diligence for on-time payment of the

premium and renewal of the policy.

4. Recovery of the amount of Gratuity.- The Controlling Authority

appointed under section 3 of the Act or any other officer notified for the purpose of

implementation of these rules by the State Government, is authorised to recover

the amount of the Gratuity payable to an employee, as determined by the employer

3

under sub-section (2) of section 7 of the Act, or in case of a dispute as decided by

the Controlling Authority under sub-section (4) of section 7 of the Act, from the Life

Insurance Corporation of India or any other insurance company with whom an

insurance has been taken under sub rule (1) of the rule 3.

5. Registration of the Establishment.- (1) Every employer shall submit an

application in Form-I to get his establishment registered with the Controlling

Authority of the area or any other officer notified for this purpose by the State

Government within thirty days from the date of obtaining insurance along with the

list of its employees insured.

(2) Every employer shall furnish the details of the employees insured, to the

Controlling Authority or any other officer notified for this purpose by the State

Government in Form-III at the time of registration of the establishment and

thereafter whenever there is a change in the employees insured or policies or any

other pertinent information.

(3) The Controlling Authority on receipt of an application under sub rule (1)

shall immediately take action for registration of the establishment in Form-IV.

6. Continuation of Approved Gratuity Fund.- Every employer of an

establishment 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

may opt to continue or adopt such arrangement by submitting an application in

Form II, provided such existing approved gratuity fund covers the entire liability of

all the employees of the establishment under the provisions of the Act.

7. Incorporation of Gratuity Trust.- (1) Every employer of an establishment

who had duly 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 shall

register the Gratuity Trust with five but not equal number of representatives of the

employer and employees with the registration authority notified under the

provisions of the Indian Trust Act, 1882 (Central Act No.02 of 1882) or any other

applicable law and thereupon take steps for compliance of provisions of the Act the

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Income Tax Act,1961 (Central Act No.43 of 1961) and any other law which is in

force.

(2) The gratuity trust shall be managed privately or by the insurance company

or jointly by paying the calculated amount to the approved gratuity trust fund

periodically by the employer;

Provided that in case of privately managed gratuity trust investment of funds

shall be done as per the provisions of the Income Tax Act, 1961 (Central Act No. 43

of 1961) by the Board of trustees and entire administration of the gratuity trust

including actual valuation shall be the responsibility of the Board of trustees. In

case of group gratuity scheme being marketed by the insurance companies the

employer shall obtain group gratuity scheme which has approval under part-C of

the fourth schedule of the Income Tax Act, 1961(Central Act No.43 of 1961) by the

competent authority.

(3) The gratuity trust shall maintain separate gratuity fund. The inflow of

contributions to the gratuity fund shall be contributory from the employer and non-

contributory for the employees. The out-flow of the gratuity fund shall be only to

the eligible employees at the time of their exit from service. The gratuity fund is

totally protected fund and money shall not be withdrawn neither by the employer

nor by the gratuity trust under any circumstances for any other purpose other than

for the payment of gratuity to the eligible employees.

(4) The bye-law of the gratuity trust shall contain detailed procedures

including performance for claiming and releasing of the calculated amount of

gratuity to each of the eligible employees on their exit from the service.

(5) The gratuity trust shall adhere to the Indian Accounting Standards 15

(Employee Benefits) and any law applicable to the trust.

(6) The Board of trustees of the gratuity trust at the time of exit of an employee

shall duly send discharge letter and advise Insurance Company or make

arrangement of payment of gratuity as per the scheme.

(7) The employer gratuity trust and the insurance company are jointly and

severally responsible for fulfillment of their liabilities under the Act.

(8) The employer shall at all times maintain the gratuity trust and gratuity

fund, as an irrevocable system.

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8. Compliance with the provisions of the Act.- Every employer of the

establishment to whom these rules apply shall take all measures to fulfill his

obligations under the provisions of the Act.

By Order and in the name of the

Governor of Karnataka,

(Suma. S)

Under Secretary to Government,

Labour Department.

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FORM – 1

APPLICATION FOR REGISTRATION OF AN ESTABLISHMENT

[see rule 5(1)]

1.

Full Name of the establishment.

2.

Full Postal Address of the establishment including its

website, twitter, facebook, e-mail and any other

communication details.

3.

Name of the employer including his/her Phone Number

4.

Full Postal Address of the employer

5.

Number of employees insured.

6.

Details of the Insurance Company.

(a) Full Name and Address

(b) Registration Number

(c) Name of the Gratuity

Policy/Policies

7.

Number of Insurance Policy or Policies

8.

Date of Commencement of Insurance Policy or Policies

9.

Terms of Insurance Policy (Copy/Copies of the Master

Insurance Policy or Policies to be enclosed)

10.

Number of employees insured (Details of employees

shall be furnished in Form-III)

11.

If the Employer had duly established an Approved

Gratuity Fund (AGF) before or after Notification of these

Rules, details of Registration of the Gratuity Trust and

Board of Trustees of the Gratuity Fund.

12.

Date of Registration and Constitution of the Board of

Trustees. (copy of the certificate of Registration to be

enclosed)

13.

Names, Postal addresses and Phone Numbers of the

Board of Trustees of the Gratuity Trust

14.

Any other Essential Information

Place:

Date:

1. Signature of the Authorized Signatory/Employer:

2. Name of the Authorized Signatory/ Employer:

3. Designation and Address of the Authorized signatory

4. Seal Of the Establishment:________________

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FORM-II

OPTION TO CONTITUE UNDER THE EXISTING INSURANCE SCHEME

[see rule 6]

I/we, on behalf of ________________establishment hereby opt to continue the

existing insurance scheme in lieu of compulsory insurance notified under section 4A

of the Payment of Gratuity Act 1972, by the Government of Karnataka. The details of

the existing Insurance Scheme are-

1.

Details of the Insurance Company

a. Full Name and Address

b. Registration Number

c.Name of the Gratuity Scheme Police/Policies

2.

Number of Insurance Policy/Policies

3.

Date

of

Commencement

of

Insurance

Policy/Policies

(copy

of

the

Insurance

Policy/Policies to be enclosed)

4.

Terms and conditions of Insurance Policy/Policies

5.

Number

of

employees

covered

(Details

of

employees to be furnished in Form-III)

6.

Details of Registration of the Gratuity Trust

7.

Date of Constitution of Gratuity Trust

8.

Names, Addresses of the Board of Trustees of the

Gratuity Trust and their Phone Numbers

9.

Any other Essential Information

Place:

Date:

1. Signature of the Employer/Authorized signatory

2. Name of the Authorized Signatory

3. Designation and Address of the Employer/Authorized Signatory with Seal

4. Seal of the Establishment:___________________

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FORM-III

DETAILS OF EMPLOYEES OF THE ESTABLISHMENT COVERED UNDER

COMPULSORY INSURANCE

[see rule 5(2)]

1.

Name of the Employee

2.

Employee Number

3.

Gender of the Employee

4.

Date of Birth and Age of the Employee

5.

Name of the Father/Husband

6.

Designation

7.

Date of Joining

8.

Wages of the Employee (in Rupees):

Basic

Rs.

Dearness Allowance (DA)

Rs.

9.

Whether the employee is no Time-rated or

piece-rated wages

10.

The details of Wages an Calculation of

wages according to the Act.

11.

Date

of

Admission

to

Compulsory

Insurance

12.

Date of retirement

13.

Age of retirement

14.

Name(s) of the Nominee (s)

15.

Any other essential Information

Place:

Date:

1. Signature of the Employer/Authorized signatory

2. Name of the Authorized Signatory

3. Designation and Address of the Employer/Authorized Signatory with Seal

4. Seal of the Establishment:___________________

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FORM-IV

GOVERNMENT OF KARNATAKA DEPARTMENT OF LABOUR

REGISTER OF ESTABLISHMENT UNDER COMPULSORY INSURANCE

[see rule 5(3)]

Registration

Number and

Date

Full Name and

Address of the

Establishment.

Name

of

the

Employer

including

his/her

Phone

Number

Number of

Employees

Insured.

Number of

Insurance

Policy

or

Policies

and

their

Details

Main

Terms and

Conditions

of

Insurance

Policy/

Policies

Renewal

Details

Initials

of

the

Authority

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Date: 2024.01.10 17:36:52 +05'30'