Rules 31-32 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Gratuity often ends up with a family member, so who is named matters. Rule 32 sets out how an employee nominates someone in Form III, the time limits, and how the employer must record it. Rule 31 covers what happens when the person entitled is a minor: the money is invested for the minor's benefit.
An employee files a nomination in Form III, in duplicate, with the employer, ordinarily within ninety days of completing one year of service (or of the Rules' commencement for those already in service for a year). The employer must verify and return an attested copy within thirty days (rule 32). Where a nominee or heir is a minor, the competent authority invests the gratuity deposited with him in a term deposit with the State Bank of India or a nationalised bank for the minor's benefit (rule 31).
Where the rules fit
Section 53 of the Code deals with payment of gratuity and sections 55 and 56 with nomination and determination (see our articles on section 53 and sections 55 and 56). Rule 31 refers to the competent authority named in the third proviso to section 53(1), and rule 32 refers to the fresh nomination required under section 55(4). These Central Rules apply where the Central Government is the appropriate Government; where the State Government is, the State's rules apply. An employer who wants its gratuity nomination files checked can ask our payroll compliance audit team to review them.
Rule 31: gratuity invested for a minor
- If the nominee or heir is a minor, the competent authority referred to in the third proviso to section 53(1) invests the gratuity amount deposited with him by the employer for the minor's benefit.
- The investment is in a term deposit with the State Bank of India or any nationalised bank.
- "Nationalised bank" means a corresponding new bank specified in the First Schedule to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or 1980.
The rule does not state the term of the deposit, and we will not guess one. Employers should note that for a minor the gratuity is deposited with the competent authority and not paid over directly; see the third proviso to section 53(1) for the trigger.
Rule 32: nomination, fresh nomination and modification
| Sub-rule | Step | Time limit |
|---|---|---|
| (1)(i) | Employee already employed one year or more at commencement of the Rules and with no nomination on record files Form III | Ordinarily within ninety days of the commencement date |
| (1)(ii) | Employee who completes one year of service after commencement | Ordinarily within ninety days of completing one year |
| (1) proviso | A nomination filed after the period is still accepted; it is not invalid merely for being late | None |
| (2) | Employer verifies service particulars against records and returns the attested duplicate with a receipt | Within thirty days of receipt |
| (3) | Employee with no family at the time of nomination files a fresh nomination in Form III on acquiring a family | Within ninety days of acquiring a family |
| (4) | Notice of modification in Form III, including where a nominee predeceases the employee | Same manner; sub-rule (2) applies |
| (6) | Nomination, fresh nomination or modification takes effect from the date the employer receives it |
How to submit
The nomination is in duplicate, and goes to the employer by personal service after taking proper receipt, by speed post (with registration) or electronically (sub-rule (1)). It is signed by the employee or, if illiterate, bears a thumb impression in the presence of two competent witnesses who sign a declaration to that effect (sub-rule (5)). The Aadhaar details of the nominee must be given by the employee when filling the nomination form (proviso to sub-rule (2)).
What employers must do
- Log the date of receipt; that is the effective date (sub-rule (6)).
- Verify the service particulars shown in Form III against the establishment's records.
- Return the attested duplicate within thirty days and obtain a receipt.
- Keep the other copy.
- Accept late nominations; do not reject for delay.
- For a fresh nomination or a modification, repeat the same steps.
Keeping this routine in the HR calendar is part of sound gratuity compliance, along with the records that support it (see rule 53 on records and registers).
Example
Rohit completes one year of service after the Rules come into force. He files Form III in duplicate by email on day 60 naming his wife and his father with shares. The employer compares the particulars with its records and returns the attested duplicate on day 75 and gets a receipt. The nomination took effect the day the employer received it. Later, his father dies; Rohit gives notice of modification in Form III, and the same thirty-day verification and return process applies. (Illustrative.)
A second example: Asha nominates no one because she has no family. After her marriage and the birth of a child, she must file a fresh nomination within ninety days of acquiring the family, as section 55(4) requires.
Need help with gratuity nomination and records?
Missing or unverified nominations create avoidable disputes at the time of payment. Our payroll compliance audit service can review your nomination files and gratuity records against these rules.
Key takeaways
- Nomination is in Form III, in duplicate, to the employer by hand (with receipt), registered speed post or electronically.
- Ordinary time limit: ninety days; a late nomination is still valid.
- The employer must verify and return the attested duplicate within thirty days and obtain a receipt.
- An employee with no family files a fresh nomination within ninety days of acquiring one.
- Modification, including on a nominee's death, uses Form III; effect is from the date of receipt.
- A minor's gratuity is invested in a term deposit with SBI or a nationalised bank (rule 31).
Read next
- Section 53: Payment of gratuity
- Sections 55 and 56: Nomination and determination of gratuity
- Rule 33: Application for gratuity and appeal
- Nomination under the Gratuity Act: Form F
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.