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of <h1>Gratuity Fund Irrevocability: Cannot Dissolve Without Business Closure, Per Rule 107 & Section 4(6) of Gratuity Act.</h1> The circular addresses the conditions under which a gratuity fund, established as an irrevocable trust, can be wound up. It clarifies that such a fund cannot be dissolved based on a resolution by trustees or beneficiaries unless the employer's business is being wound up or discontinued, as per Rule 107 of the Income-tax Rules. The Board, after consulting with the Ministry of Law, finds no conflict between Rule 7 of Part C of the Fourth Schedule and Rule 106 of the Income-tax Rules. Gratuity funds can only be repaid to the employer if employee gratuities are forfeited under specific conditions outlined in Section 4(6) of the Payment of Gratuity Act, 1972.
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