The valuable advice of learned experts/members is sought.
The statements of your employer are verbal or in writing?
You can approach the jurisdictional authority at Banglore and clarify the stand of your employer. Either employer is right or you are right or jurisdictional authority shall be right. You can use RTI route if required.
"The Payment of Gratuity Act 1972 is a Central Act.
The Karnataka Cooperative Societies Act is a State Act.
Provisions of State Act cannot override the provisions of Central Act. (unless otherwise enacted)
Hence any establishment where 10 or more employees are employed is governed by the Payment of Gratuity Act 1972.
Those cooperative societies which are coming under the Payment of Gratuity Act 1972 ( i.e. less than 10 employees) may pay as per the KCS Act and its Rules.
The Payment of Gratuity Act 1972 recommends only better gratuity schemes and not less."