Income Tax Act, 1961
Sch. IV Part C Rule 3. CONDITIONS FOR APPROVAL.
In order that a gratuity fund may receive and retain approval, it shall satisfy the conditions set out below and any other conditions which the Board may, by rules, prescribe – (a) The fund shall be a fund established under an irrevocable trust, in connection with a trade or undertaking carried on in India, and not less than ninety per cent. of the employees shall be employed in India;
(b) The fund shall have for its sole purpose the provision of a gratuity to employees in the trade or undertaking on their retirement at or after a specified age or on their becoming incapacitated prior to such retirement or on termination of their employment after a minimum period of service specified in the rules of the fund or to the widows, children or dependants of such employees on their death;
(c) The employer in the trade or undertaking shall be a contributor to the fund; and
(d) All benefits granted by the fund shall be payable only in India.