The
Fourth Schedule
Recognised
Provident Funds81[R2]
[See
sections 2(38), 10(12), 10(25), 36(1)(iv), 82[R3] 87(1)(d), 111, 192(4)]
Application
of Part.
1. This
Part shall not apply to any provident fund to which the Provident Funds Act,
1925 (19 of 1925), applies.
Definitions.
2. In
this Part, unless the context otherwise requires,—
(a) “employer” means
any person who maintains a provident fund for the benefit of his or its
employees, being—
(i) a Hindu
undivided family, company, firm or other association of persons, or
(ii) an individual
engaged in a business or profession the profits and gains whereof are
assessable to income-tax under the head “Profits and gains of business or
profession”;
(b) “employee”
means an employee participating in a provident fund, but does not include a
personal or domestic servant;
(c) “contribution” means any sum credited by
or on behalf of any employee out of his salary, or by an employer out of his
own moneys, to the individual account of an employee, but does not include any
sum credited as interest;
(d) “balance to the
credit of an employee” means the total amount to the credit of his individual
account in a provident fund at any time;
(e) “annual
accretion”, in relation to the balance to the credit of an employee, means the
increase to such balance in any year, arising from contributions and interest;
(f) “accumulated
balance due to an employee” means the balance to his credit, or such portion
thereof as may be claimable by him under the regulations of the fund, on the
day he ceases to be an employee of the employer maintaining the fund;
(g) “regulations of
a fund” means the special body of regulations governing the constitution and
administration of a particular provident fund; and
(h) “salary”
includes dearness allowance, if the terms of employment so provide, but excludes
all other allowances and perquisites.
According
and withdrawal of recognition.
3.
(1) The 83[R4] [Chief Commissioner or Commissioner] may
accord recognition to any provident fund which, in his opinion, satisfies the
conditions prescribed in rule 4 and the rules made by the Board in this behalf,
and may, at any time, withdraw such recognition if, in his opinion, the
provident fund contravenes any of those conditions.
(2) An order according recognition shall take effect on such date
as the 83[R5] [Chief Commissioner or Commissioner] may fix
in accordance with any rules the Board may make in this behalf, such date not
being later than the last day of the financial year in which the order is made.
(3) An order withdrawing recognition shall take effect from the
date on which it is made.
(4) An order according recognition to a provident fund shall not,
unless the 83a[R6] [Chief Commissioner or Commissioner] otherwise
directs, be affected by the fact that the fund is subsequently amalgamated with
another provident fund on the occurrence of an amalgamation of the undertakings
in connection with which the two funds are maintained, or that it subsequently
absorbs the whole or a part of another provident fund belonging to an
undertaking which is wholly or in part transferred to or merged in the
undertaking of the employer maintaining the first-mentioned fund.
Conditions
to be satisfied by recognised provident funds.
4. In order that a provident fund may receive and retain recognition, it
shall, subject to the provisions of rule 5, satisfy the conditions set out
below and any other conditions which the Board may, by rules, specify—
(a) all employees shall be employed in
(b) the
contributions of an employee in any year shall be a definite proportion of his
salary for that year, and shall be deducted by the employer from the employee’s
salary in that proportion, at each periodical payment of such salary in that
year, and credited to the employee’s individual account in the fund;
(c) the
contributions of an employer to the individual account of an employee in any
year shall not exceed the amount of the contributions of the employee in
that year, and shall be credited to the employee’s individual account at
intervals not exceeding one year;
(d) the fund shall be vested in two or more trustees or in the
Official Trustee under a trust which shall not be revocable, save with the
consent of all the beneficiaries;
(e) the
fund shall consist of contributions as above specified, received by the
trustees, of accumulations thereof, and of interest credited in respect of such
contributions and accumulations, and of securities purchased therewith and of
any capital gains arising from the transfer of capital assets of the fund, and
of no other sums;
(f) the
employer shall not be entitled to recover any sum whatsoever from the fund,
save in cases where the employee is dismissed for misconduct or voluntarily
leaves his employment otherwise than on account of ill-health or other
unavoidable cause before the expiration of the term of service specified in
this behalf in the regulations of the fund :
Provided that in such cases the recoveries made by the
employer shall be limited to the contributions made by him to the individual
account of the employee, and to interest credited in respect of such
contributions in accordance with the regulations of the fund and the
accumulations thereof;
(g) the accumulated
balance due to an employee shall be payable on the day he ceases to be an
employee of the employer maintaining the fund;
(h) save as provided in clause (g) or in accordance with such
conditions and restrictions as the Board may, by rules, specify, no portion of the
balance to the credit of an employee shall be payable to him.
Relaxation of conditions.
5.
(1) Notwithstanding
anything contained in clause (a)
of rule 4, the 84[R7] [Chief Commissioner or Commissioner] may, if
he thinks fit and subject to such conditions, if any, as he thinks proper to
attach to the recognition, accord recognition to a fund maintained by an
employer whose principal place of business is not in India, provided the
proportion of employees employed outside India does not exceed ten per cent.
(2) Notwithstanding anything contained in
clause (b) of rule 4, an
employee who retains his employment while serving in the armed forces of the
Union or when taken into or employed in the national service under any law for
the time being in force, may, whether he receives from the employer any salary
or not, contribute to the fund during his service in the armed forces of the
Union or while so taken into or employed in the national service a sum not
exceeding the amount he would have contributed had he continued to serve the
employer.
(3) Notwithstanding anything contained in
clause (e) or clause (g) of rule 4,—
(a) at the request made in writing by the
employee who ceases to be an employee of the employer maintaining the fund, the
trustees of the fund may consent to retain the whole or any part of the
accumulated balance due to the employee to be drawn by him at any time on
demand;
(b) where the
accumulated balance due to an employee who has ceased to be an employee is
retained in the fund in accordance with the preceding clause, the fund may
consist also of interest in respect of such accumulated balance;
85[R8] (c) the fund may also consist of any
amount transferred from the individual account of an employee in any recognised
provident fund maintained by his former employer and the interest in respect
thereof.]
(4) Subject to any rules86 [R9] which the Board may make in this behalf, the 87[R10] [Chief
Commissioner or Commissioner] may, in respect of any particular fund, relax the
provisions of clause (c) of
rule 4,—
(a) so
as to permit the payment of larger contributions by an employer to the
individual accounts of employees whose salaries do not in each case exceed five
hundred rupees per mensem; and
(b) so as to permit the crediting by employers to the individual
accounts of employees of periodical bonuses or other contributions of a
contingent nature, where the calculation and payment of such bonuses or other
contributions is provided for on definite principles by the regulations of the
fund.
(5) Notwithstanding anything contained in clause (h) of rule 4, in order to enable an
employee to pay the amount of tax assessed on his total income as determined
under sub-rule (4) of rule 11, he shall be entitled to withdraw from the
balance to his credit in the recognised provident fund a sum not exceeding the
difference between such amount and the amount to which he would have been
assessed if the transferred balance referred to in sub-rule (2) of rule 11 had
not been included in his total income.
Employer’s
annual contributions, when deemed to be income received by employee.
6. That
portion of the annual accretion in any previous year to the balance at the
credit of an employee participating in a recognised provident fund as consists
of—
(a) contributions made by the employer in excess of 88[R11] [twelve]
per cent of the salary of the employee, and
(b) interest
credited on the balance to the credit of the employee in so far as it 89[R12] [***]
is allowed at a rate exceeding such rate as may be fixed by the Central
Government in this behalf by notification in the Official Gazette,shall be deemed to have been received by the
employee in that previous year and shall be included in his total income for
that previous year, and shall be liable to income-tax 90[R13] [***].
91[R14] Exemption for employee’s contributions.
7. An
employee participating in a recognised provident fund shall, in respect of his
own contributions to his individual account in the fund in the previous year,
be entitled to a deduction in the computation of his total income of an amount
determined in accordance with 92[R15] [section
80C].]
Exclusion
from total income of accumulated balance.
8. The
accumulated balance due and becoming payable to an employee participating in a
recognised provident fund shall be excluded from the computation of his total
income—
(i) if he has rendered continuous service with his employer for
a period of five years or more, or
(ii) if,
though he has not rendered such continuous service, the service has been
terminated by reason of the employee’s ill-health, or by the contraction or
discontinuance of the employer’s business or other cause beyond the control of
the employee, 93[R16] [or]
94[R17] (iii) if,
on the cessation of his employment, the employee obtains employment with any
other employer, to the extent the accumulated balance due and becoming payable
to him is transferred to his individual account in any recognised provident
fund maintained by such other employer.
Explanation.—Where the accumulated balance due and
becoming payable to an employee participating in a recognised provident fund
maintained by his employer includes any amount transferred from his individual
account in any other recognised provident fund or funds maintained by his
former employer or employers, then, in computing the period of continuous
service for the purposes of clause (i)
or clause (ii) the period or
periods for which such employee rendered continuous service under his former
employer or employers aforesaid shall be included.]
Tax
on accumulated balance.
9.
(1) Where the accumulated
balance due to an employee participating in a recognised provident fund is
included in his total income owing to the provisions of rule 8 not being
applicable, the 95[R18] [Assessing]
Officer shall calculate the total of the various sums of 96[R19] [tax]
which would have been payable by the emp-loyee in
respect of his total income for each of the years concerned if the fund had not
been a recognised provident fund, and the amount by which such total exceeds
the total of all sums paid by or on behalf of such employee by way of tax for
such years shall be payable by the employee in addition to any other 96[R20] [tax]
for which he may be liable for the previous year in which the accumulated
balance due to him becomes payable.
(2) Where the accumulated balance due to an employee
participating in a recognised provident fund which is not included in his total
income under the provisions of rule 8 becomes payable, an amount equal to the
aggregate of the amounts of super-tax on annual accretions that would have been
payable under section 58E of the Indian Income-tax Act, 1922 (11 of 1922), for
any assessment year up to and including the assessment year 1932-33, if the
Indian Income-tax (Second Amendment) Act, 1933 (18 of 1933), had come into
force on the 15th day of March, 1930, shall be payable by the employee in
addition to any other tax payable by him for the previous year in which such
balance becomes payable.
Deduction
at source of tax payable on accumulated balance.
10. The
trustees of a recognised provident fund, or any person authorised by the
regulations of the fund to make payment of accumulated balances due to
employees, shall, in cases where sub-rule (1) of rule 9 applies, at the time an
accumulated balance due to an employee is paid, deduct therefrom the amount
payable under that rule and all the provisions of Chapter XVII-B shall apply as
if the accumulated balance were income chargeable under the head “Salaries”.
Treatment
of balance in newly recognised provident fund.
11. (1)
Where recognition
is accorded to a provident fund with existing balances, an account shall be
made of the fund up to the day immediately preceding the day on which the
recognition takes effect, showing the balance to the credit of each employee on
such day, and containing such further particulars as the Board may prescribe.
(2) The account shall also show in respect of the balance to
the credit of each employee the amount thereof which is to be transferred to
that employee’s account in the recognised provident fund, and such amount
(hereinafter called his transferred balance) shall be shown as the balance to
his credit in the recognised provident fund on the date on which the
recognition of the fund takes effect, and sub-rule (4) of this rule and
sub-rule (5) of rule 5 shall apply thereto.
(3) Any portion of the balance to the credit of an employee in
the existing fund which is not transferred to the recognised fund shall be
excluded from the accounts of the recognised fund and shall be liable to
income-tax 97[R21] [***]
in accordance with the provisions of this Act, other than this Part.
(4) Subject to such rules as the Board may make in this behalf,
the 98[R22] [Assessing]
Officer shall make a calculation of the aggregate of all sums comprised in a
transferred balance which would have been liable to income-tax if this Part had
been in force from the date of the institution of the fund, without regard to
any tax which may have been paid on any sum, and such aggregate (if any) shall
be deemed to be income received by the employee in the previous year in which
the recognition of the fund takes effect and shall be included in the
employee’s total income for that previous year, and, for the purposes of
assessment, the remainder of the transferred balance shall be disregarded, but
no other exemption or relief, by way of refund or otherwise, shall be granted
in respect of any sum comprised in such transferred balance :
Provided that, in cases of serious accounting difficulty, the 99[R23] [Chief
Commissioner or Commissioner] may, subject to the said rules, make a summary
calculation of such aggregate.
(5) Nothing in this rule shall affect the rights of the persons
administering an unrecognized provident fund or dealing with it, or with the
balance to the credit of any individual employee before recognition is
accorded, in any manner which may be lawful.
Accounts
of recognised provident funds.
12.
(1) The
accounts of a recognised provident fund shall be maintained by the trustees of
the fund and shall be in such form and for such periods, and shall contain such
particulars, as the Board may prescribe.
(2) The
accounts shall be open to inspection at all reasonable times by income-tax
authorities, and the trustees shall furnish to the 1[R24] [Assessing]
Officer such abstracts thereof as the Board may
prescribe.
Appeals.
13. (1)
An employer objecting to an order
of the 2[R25] [Chief
Commissioner or Commissioner] refusing to recognise or an order withdrawing recognition
from a provident fund may appeal, within sixty days of such order, to the
Board.
(2) The appeal shall be in such form and shall be verified in such
manner and shall be subject to the payment of such fee as the Board may
prescribe.
Treatment
of fund transferred by employer to trustee.
14. (1) Where an employer, who maintains a
provident fund (whether recognised or not) for the benefit of his employees and
has not transferred the fund or any portion of it, transfers such fund or
portion to trustees in trust for the employees participating in the fund, the
amount so transferred shall be deemed to be of the nature of capital
expenditure.
(2) When an employee participating in such fund is paid the
accumulated balance due to him therefrom, any portion of such balance as
represents his share in the amount so transferred to the trustees (without
addition of interest, and exclusive of the employee’s contributions and
interest thereon) shall, if the employer has made effective arrangements to secure
that tax shall be deducted at source from the amount of such share when paid to
the employee, be deemed to be an expenditure by the employer within the meaning
of section 37, incurred in the
previous year in which the accumulated balance due to the employee is paid.
3[R26] Provisions relating to rules.
15. (1) In addition to any power conferred by
this Part, the Board may make rules—
(a) prescribing the statements and other information to be
submitted along with an application for recognition;
(b) limiting the contributions to a recognised provident fund by
employees of a company who are shareholders in the company;
4[R27] (bb) regulating
the investment or deposit of the moneys of a recognised provident fund :
Provided that no rule made under this clause shall
require the investment of more than fifty per cent of the moneys of such fund
in Government securities5[R28] as
defined in section 2 of the Public Debt Act, 1944 (18 of 1944);]
(c) providing for the assessment by way of penalty of any consideration
received by an employee for an assignment of, or creation of a charge upon, his
beneficial interest in a recognised provident fund;
(d) determining the extent to and the manner in which exemption
from payment of 6[R29] [tax]
may be granted in respect of contributions and interest credited to the
individual accounts of employees in a provident fund from which recognition has
been withdrawn; and
(e) generally, to carry out the purposes of this Part and to
secure such further control over the recognition of provident funds and the
administration of recognised provident funds as it may deem requisite.
(2) All rules made under this Part shall be subject to the
provisions of section 296.
Approved superannuation funds7[R30]
[See
sections 2(6), 10(13), 10(25)(iii), 36(1)(iv), 8[R31] 87(1)(e), 192(5), 9[R32] [206]]
Definitions.
1. In
this Part, unless the context otherwise requires, “employer”, “employee”,
“contribution” and “salary” have, in relation to superannuation funds, the meanings
assigned to those expressions in rule 2 of Part A in relation to provident
funds.
Approval
and withdrawal of approval.
2.
(1) The 10[R33] [Chief
Commissioner or Commissioner] may accord approval to any superannuation fund or
any part of a superannuation fund which, in his opinion, complies with the
requirements of rule 3, and may at any time withdraw such approval, if, in his
opinion, the circumstances of the fund or part cease to warrant the continuance
of the approval.
(2) The 11[R34] [Chief
Commissioner or Commissioner] shall communicate in writing to the trustees of
the fund the grant of approval with the date on which the approval is to take
effect, and, where the approval is granted subject to conditions, those
conditions.
(3) The 11[R35] [Chief
Commissioner or Commissioner] shall communicate in writing to the trustees of
the fund any withdrawal of approval with the reasons for such withdrawal and
the date on which the withdrawal is to take effect.
(4) The 11[R36] [Chief
Commissioner or Commissioner] shall neither refuse nor withdraw approval to any
superannuation fund or any part of a superannuation fund unless he has given
the trustees of that fund a reasonable opportunity of being heard in the
matter.
Conditions
for approval.
3. In
order that a superannuation 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—
12[R37] (a) the
fund shall be a fund established under an irrevocable trust in connection with
a trade or undertaking carried on in
(b) the
fund shall have for its sole purpose the provision of annuities for 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 for the widows,
children or dependants of persons who are or have been such employees on the
death of those persons ;
(c) the
employer in the trade or undertaking shall be a contributor to the fund ; and
(d) all
annuities, pensions and other benefits granted from the fund shall be payable
only in
Application
for approval.
4.
(1) An application for
approval of a superannuation fund or part of a superannuation fund shall be
made in writing by the trustees of the fund to the 13[R38] [Assessing]
Officer by whom the employer is assessable, and shall be accompanied by a copy
of the instrument under which the fund is established and by two copies of the
rules 14[R39] [and,
where the fund has been in existence during any year or years prior to the
financial year in which the application for approval is made, also two copies
of the accounts of the fund relating to such prior year or years (not being
more than three years immediately preceding the year in which the said
application is made)] for which such accounts have been made up, but the 15[R40] [Chief
Commissioner or Commissioner] may require such further information to be
supplied as he thinks proper.
(2) If any alteration in the rules, constitution, objects or
conditions of the fund is made at any time after the date of the application
for approval, the trustees of the fund shall forthwith communicate such
alteration to the 16[R41] [Assessing]
Officer mentioned in sub-rule (1), and in default of such communication any
approval given shall, unless the 17[R42] [Chief
Commissioner or Commissioner] otherwise orders, be deemed to have been
withdrawn from the date on which the alteration took effect.
Contributions
by employer when deemed to be income of employer.
5. Where
any contributions by an employer (including the interest thereon, if any) are repaid
to the employer, the amount so repaid shall be deemed for the purpose of
income-tax 18[R43] [***]
to be the income of the employer of the previous year in which it is so repaid.
Deduction
of tax on contributions paid to an employee.
19[R44] 6. Where
any contributions made by an employer, including interest on contributions, if
any, are paid to an employee during his lifetime 20[R45] [in
circumstances other than those referred to in clause (13) of section 10], 21[R46] [tax]
on the amounts so paid shall be deducted at the average rate of 21[R47] [tax]
at which the employee was liable to 21[R48] [tax]
during the preceding three years or during the period, if less than three
years, when he was a member of the fund, and shall be paid by the trustees to the
credit of the Central Government within the prescribed time and in such manner
as the Board may direct.
Deduction
from pay of and contributions on behalf of employee to be included in return.
7. Where
an employer deducts from the emoluments paid to an employee or pays on his
behalf any contributions of that employee to an approved superannuation fund,
he shall include all such deductions or payments in the return which he is
required to furnish under 22[R49] [***]
section 206.
Appeals.
8.
(1) An employer objecting
to an order of the 23[R50] [Chief
Commissioner or Commissioner] refusing to accord approval to a superannuation
fund or an order withdrawing such approval may appeal, within sixty days of
such order, to the Board.
(2) The appeal shall be in such form and shall be verified in such
manner and shall be subject to the payment of such fee as may be prescribed.24[R51]
Liability
of trustees on cessation of approval.
9. If
a fund or a part of a fund for any reason ceases to be an approved superannuation
fund, the trustees of the fund shall nevertheless remain liable to tax on any
sum paid on account of returned contributions (including interest on
contributions, if any), in so far as the sum so paid is in respect of
contributions made before the fund or part of the fund ceased to be an approved
superannuation fund under the provisions of this Part.
Particulars
to be furnished in respect of superannuation funds.
10. The
trustees of an approved superannuation fund and any employer who contributes to
an approved superannuation fund shall, when required by notice from the 25[R52] [Assessing]
Officer, within such period, not being less than twenty-one days from the date
of the notice, as may be specified in the notice, furnish such return, statement,
particulars or information, as the 26[R53] [Assessing]
Officer may require.
Provisions
relating to rules.
11. (1) In addition to any power conferred by
this Part, the Board may make rules—
(a) prescribing the statements and other information to be
submitted along with an application for approval ;
(b) prescribing the returns, statements, particulars, or
information which the 26[R54] [Assessing]
Officer may require from the trustees of an approved superannuation fund or
from the employer ;
(c) limiting the ordinary annual contribution and any other
contributions to an approved superannuation fund by an employer ;
27[R55] (cc) regulating
the investment or deposit of the moneys of an approved superannuation fund :
Provided that no rule made under this clause shall
require the investment of more than fifty per cent of the moneys of such fund
in 28[R56] Government
securities as defined in section 2 of the Public Debt Act, 1944 (18 of 1944) ;]
(d) providing for the assessment by way of penalty of any
consideration received by an employee for an assignment of, or creation of a
charge upon, his beneficial interest in an approved superannuation fund ;
(e) determining the extent to, and the manner in, which exemption
from payment of 29[R57] [tax]
may be granted in respect of any payment made from a superannuation fund from
which approval has been withdrawn ;
(f) providing for the withdrawal of approval in the case of a fund
which ceases to satisfy the requirements of this Part or of the rules made
thereunder ; and
(g) generally, to carry out the purposes of this Part and to
secure such further control over the approval of the superannuation funds and
the administration of approved superannuation funds as it may deem requisite.
(2) All rules made under this Part shall be subject to the
provisions of section 296.
Approved gratuity funds30[R58]
[See sections 2(5), 31[R59] [10(25)(iv),] 17(1)(iii), 36(1)(v)]
Definitions.
1. In
this Part, unless the context otherwise requires “employer”, “employee”,
“contribution” and “salary” have, in relation to gratuity funds, the meanings
assigned to those expressions in rule 2 of Part A in relation to provident
funds.
Approval
and withdrawal of approval.
2.
(1) The 32[R60] [Chief
Commissioner or Commissioner] may accord approval to any gratuity fund which,
in his opinion, complies with the requirements of rule 3 and may at any time
withdraw such approval if, in his opinion, the circum-stances of the fund cease
to warrant the continuance of the approval.
(2) The 32[R61] [Chief
Commissioner or Commissioner] shall communicate in writing to the trustees of
the fund the grant of approval with the date on which the approval is to take
effect and where the approval is granted subject to conditions, those
conditions.
(3) The 32[R62] [Chief
Commissioner or Commissioner] shall communicate in writing to the trustees of
the fund any withdrawal of approval with the reasons for such withdrawal and
the date on which the withdrawal is to take effect.
(4) The 32a[R63] [Chief
Commissioner or Commissioner] shall neither refuse nor withdraw approval to any
gratuity fund unless he has given the trustees of that fund a reasonable
opportunity of being heard in the matter.
Conditions
for approval.
3. 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
(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
Application
for approval.
4.
(1) An application for
approval of a gratuity fund shall be made in writing by the trustees of the
fund to the 33[R64] [Assessing]
Officer by whom the employer is assessable and shall be accompanied by a copy
of the instrument under which the fund is established and by two copies of the
rules 34[R65] [and,
where the fund has been in existence during any year or years prior to the
financial year in which the application for approval is made, also two copies
of the accounts of the fund relating to such prior year or years (not being
more than three years immediately preceding the year in which the said
application is made)] for which such accounts have been made up, but the 35[R66] [Chief
Commissioner or Commissioner] may require such further information to be
supplied as he thinks proper.
(2) If any alteration in the rules, constitution, objects or
conditions of the fund is made at any time after the date of the application
for approval, the trustees of the fund shall forthwith communicate such
alterations to the 36[R67] [Assessing]
Officer mentioned in sub-rule (1), and in default of such communication, any
approval given shall, unless the 35[R68] [Chief
Commissioner or Commissioner] otherwise orders, be deemed to have been
withdrawn from the date on which the alteration took effect.
Gratuity
deemed to be salary.
5. Where
any gratuity is paid to an employee during his lifetime, the gratuity shall be
treated as salary paid to the employee for the purposes of this Act.
Liability
of trustees on cessation of approval.
6. If
a gratuity fund for any reason ceases to be an approved gratuity fund, the
trustees of the fund shall nevertheless remain liable to tax on any gratuity
paid to any employee.
Contributions
by employer, when deemed to be income of employer.
7. Where
any contributions by an employer (including the interest thereon, if any) are
repaid to the employer, the amount so repaid shall be deemed for the purposes
of income-tax 37[R69] [***]
to be the income of the employer of the previous year in which they are so
repaid.
Appeals.
8.
(1) An employer objecting
to an order of the
38[R70] [Chief
Commissioner or Commissioner] refusing to accord approval to a gratuity fund or
an order withdrawing such approval may appeal, within sixty days of such order,
to the Board.
(2) The appeal shall be in such form and shall be verified in such
manner and shall be subject to the payment of such fee as may be prescribed.39[R71]
40[R72] Particulars to be furnished in respect of gratuity funds.
8A. The
trustees of an approved gratuity fund and any employer who contributes to an
approved gratuity fund shall, when required by notice from the 41[R73] [Assessing]
Officer, furnish within such period, not being less than twenty-one days from
the date of the notice, as may be specified in the notice, such return,
statement, particulars or information, as the 42[R74] [Assessing]
Officer may require.]
Provisions
relating to rules.
9. (1)
In addition to any power conferred
in this Part, the Board may make rules—
(a) prescribing the statements and other information to be submitted
along with an application for approval ;
(b) limiting the ordinary annual and other contributions of an
employer to the fund ;
43[R75] (bb) regulating
the investment or deposit of the moneys of an approved gratuity fund :
Provided that no rule made under this clause shall
require the investment of more than fifty per cent of the moneys of such fund
in Government securities44[R76] as
defined in section 2 of the Public Debt Act, 1944 (18 of 1944) ;]
(c) Providing
for the assessment by way of penalty of any consideration received by an
employee for an assignment of, or the creation of a charge upon, his beneficial
interest in an approved gratuity fund;
(d) Providing
for the withdrawal of the approval in the case of a fund which ceases to
satisfy the requirements of this Part or the rules made there under; and
(e) Generally,
to carry out the purposes of this Part and to secure such further control over
the approval of gratuity funds and the administration of gratuity funds as it
may deem requisite.
(2) All rules made under this Part shall be subject to the
provisions of section 296.
[R1]See also
Circular No. 188, dated 16-1-1976.
[R2]See rules 67,
67A, 68, 69, 70, 71, 72, 73, 74,
75, 76, 77, 78, 79, 80 and 81
and Form Nos. 40A, 40B, 41 and 42 for form of nomination for recognised
provident fund/gratuity fund, form of notice for modification of nomination,
form of account of recognised provident fund, and form of appeal, respectively.
[R3]“88(2)(vi)” should now be substituted for “87(1)(d)”.
[R4]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R5]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R6]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R7]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R8]Inserted by the Finance Act, 1974, w.e.f. 1-4-1974.
[R9]See rule 75
[R10]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R11]Substituted for “ten” by the Finance Act, 1997, w.e.f.
1-4-1998.
[R12]Words “exceeds one-third of the salary of the employee or” omitted by
the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.
[R13]Words “and super-tax” omitted by the Finance Act,
1965, w.e.f. 1-4-1965.
[R14]Substituted by the Finance Act, 1965, w.e.f. 1-4-1965.
[R15]Substituted for “section 80A or, as the case may
be, to a deduction from the amount of income-tax with which he is
chargeable on his total income of an amount of income-tax determined in accordance with section 87” by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968.
[R16]Inserted by the Finance Act, 1974, w.e.f. 1-4-1975.
[R17]Inserted by the Finance Act, 1974, w.e.f. 1-4-1975.
[R18]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R19]Substituted for “income-tax and super-tax” by the Finance Act, 1965, w.e.f. 1-4-1965.
[R20]Substituted for “income-tax and super-tax” by the
Finance Act, 1965, w.e.f. 1-4-1965.
[R21]Words “and super-tax” omitted by the Finance Act,
1965, w.e.f. 1-4-1965.
[R22]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R23]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R24]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R25]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R26]See rules 67,
67A, 68, 69, 70, 71, 72, 73, 74,
75, 76, 77, 78, 79, 80 and 81.
[R27]Inserted by the Taxation Laws (Amendment) Act, 1970,
w.e.f. 1-4-1971.
[R29]Substituted for “income-tax and super-tax” by the
Finance Act, 1965, w.e.f. 1-4-1965.
[R30]See rules 82,
83, 84, 85, 86, 87, 88, 89, 90,
91, 92, 93, 94, 95, 96 and 97
and Form No. 43 for form of appeal.
[R31]“88(2)(vii)” should
now be substituted for “87(1)(e)”.
[R32]Substituted for “206(2)” by the Finance Act, 1987,
w.e.f. 1-6-1987.
[R33]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R34]Substituted for “Commissioner” the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R35]Substituted for “Commissioner” the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R36]Substituted for “Commissioner” the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R37]See also Circular No. 500, dated 9-12-1987, Circular No. 444, dated 13-12-1985, Circular No. 482, dated 26-3-1987 and Circular No. 595, dated 5-3-1991.
[R38]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R39]Substituted for “and of the accounts of the fund for
the last year” by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.
[R40]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R41]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R42]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R43]Words “and super-tax” omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[R44]See rule
33 and Form No. 22.
[R45]Inserted by the Finance Act, 1965, w.e.f. 1-4-1965.
[R46]Substituted for “income-tax and super-tax” by the
Finance Act, 1965, w.e.f. 1-4-1965.
[R47]Substituted for “income-tax and super-tax” by the Finance
Act, 1965, w.e.f. 1-4-1965.
[R48]Substituted for “income-tax and super-tax” by the
Finance Act, 1965, w.e.f. 1-4-1965.
[R49]Words “sub-section (1) of” omitted by the Finance Act,
1987, w.e.f. 1-6-1987.
[R50]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R51]See rule
97 and Form No. 43.
[R52]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R53]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R54]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R55]Inserted by the Taxation Laws (Amendment) Act, 1970,
w.e.f. 1-4-1971.
[R57]Substituted for “income-tax and super-tax” by the Finance Act, 1965, w.e.f. 1-4-1965.
[R58]See rules 98,
99, 100, 101, 101A, 102, 103, 104,
105, 106, 107, 108, 109, 110 and 111
and Form No. 44 for form of appeal.
[R59]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.
[R60]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R61]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R62]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R63]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R64]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R65]Substituted for “and of the accounts of the fund for the last three
years” by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.
[R66]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R67]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R68]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R69]Words “and super-tax” omitted by the Finance Act,
1965, w.e.f. 1-4-1965.
[R70]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R71]See rule
111 and Form No. 44.
[R72]Inserted by the Taxation Laws (Amendment) Act, 1970,
w.e.f. 1-4-1971.
[R73]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R74]Substituted for “Income-tax” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R76]Inserted by the Taxation Laws (Amendment) Act, 1970,
w.e.f. 1-4-1971.