Rule 317: Trust and trustee conditions for a gratuity fund
Rule 317 sets conditions on the trust and trustees of a gratuity fund. Rules 316 to 329 govern approved gratuity funds under Part B of Schedule XI to the Act. The fund and trust must be in India, have at least two trustees, need prior approval for a company trustee, and trustees must be resident in India.
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Bare law
Rule 317 - Conditions regarding trust and trustees
(1) The fund and the trust shall be established in India.
(2) The trust shall have at least two trustees provided that a company as defined in section 2(20) of the Companies Act, 2013 (18 of 2013) shall not be appointed as a trustee without the prior approval of the approving authority.
(3) The trustees of the fund shall be a resident in India and any trustee who leaves India permanently shall vacate his office.
Rule breakdown
Conditions
Fund and trust established in India.
At least two trustees.
Company trustee only with prior approval of the approving authority.
Trustees resident in India; one who leaves India permanently vacates office.
Key takeaways
India-based
Fund and trust in India.
Two trustees
Minimum two.
Residency
Trustees must be resident.
Practical checklist
- Keep at least two resident trustees at all times.
Avoid
- Do not appoint a corporate trustee without approval.
FAQs
How many trustees?
At least two (Rule 317(2)).
Can a company be trustee?
Only with prior approval of the approving authority.
What if a trustee leaves India permanently?
He vacates office (Rule 317(3)).
Glossary
- Trustee
- Defined in Rule 316(d).
- Resident
- Resident in India.