Rule 318: Investment of gratuity fund money
Rule 318 sets how gratuity fund money may be held. Rules 316 to 329 govern approved gratuity funds under Part B of Schedule XI to the Act. It may be kept in a Post Office Savings Bank account or a current or savings account with a scheduled bank, or used for contributions under a Group Gratuity Scheme with LIC or another insurer. The rest is invested as per notification F. No. 11/14/2013-PR dated 2 March 2015, as amended.
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Bare law
Rule 318 - Investment of fund moneys
(1) All moneys contributed to the fund or received or accrued by way of interest, or otherwise, may be–
(a) deposited in a Post Office Savings Bank Account in India; or
(b) deposited in a current account or in a savings account with any scheduled bank; or
(c) utilised for the purpose of making contributions under Group Gratuity Scheme entered into with the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956) or any other insurer as defined in section 2(58) of the Act;
(2) Any funds not deposited or used as mentioned above shall be invested in accordance with the notification of the Ministry of Finance, (Department of Financial Services) number F. No. 11/14/2013–PR, dated the 2nd March, 2015 published in the Gazette of India, Extraordinary, Part I, Section 1, as amended from time to time.
Rule breakdown
Permitted uses: Rule 318(1)
Post Office Savings Bank account.
Current or savings account with a scheduled bank.
Contributions under a Group Gratuity Scheme with LIC or any insurer under section 2(58).
Other investments: Rule 318(2)
As per notification F. No. 11/14/2013-PR dated 2 March 2015 (Department of Financial Services), as amended.
Key takeaways
Bank deposits
Allowed.
Group gratuity scheme
Contributions to LIC or insurers allowed.
Investment pattern
Rest follows the 2015 notification.
Practical checklist
- Record each investment against the notified pattern.
Avoid
- Do not invest outside the permitted options.
FAQs
Can gratuity fund money go into an insurer's group gratuity scheme?
Yes, with LIC or any other insurer (Rule 318(1)(c)).
Which notification governs other investments?
F. No. 11/14/2013-PR dated 2 March 2015, as amended.
Is this similar to superannuation funds?
Yes, Rule 303.
Glossary
- Group Gratuity Scheme
- A scheme with an insurer to fund gratuity.
- Insurer
- As defined in section 2(58).