The Fourth Schedule
Recognized
Provident Funds66[R2]
[See sections 2(38), 10(12), 10(25), 36(1)(iv), 67[R3] ,87(1)(d), 111, 192(4)]
1. This Part shall not apply to any provident
fund to which the Provident Funds Act, 1925 (19 of 1925), applies.
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
68[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 68[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 68[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 India, or shall be employed by an employer whose
principal place of business is in India;
(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 69[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;
70[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 rules71[R9] which the Board may make in this behalf, the 72[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 73[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 74[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 75[R13] [***].
76[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 77[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, 78[R16] [or]
79[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 80[R18] [Assessing]
Officer shall calculate the total of the various sums of 81[R19] [tax] which would
have been payable by the employee 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 81[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 82[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 83[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 84[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 unrecognised
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 85[R24] [Assessing]
Officer such abstracts thereof as the Board may prescribe.
Appeals.
13. (1) An
employer objecting to an order of the 86[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.
87[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;
88[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 securities89[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 90[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.
Part
B
Approved superannuation funds91[R30]
[See sections 2(6),
10(13), 10(25)(iii), 36(1)(iv), 92[R31] 87(1)(e) 192(5), 93[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 94[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
95[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
95[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
95[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—
96[R37] (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 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 India.
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 97[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 98[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 99[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 1[R41] [Assessing]
Officer mentioned in sub-rule (1), and in default of such communication any
approval given shall, unless the 99[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 2[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.
3[R44] 6. Where any
contributions made by an employer, including interest on contributions, if any,
are paid to an employee during his lifetime 4[R45] [in circumstances
other than those referred to in clause (13) of section 10], 5[R46] [tax] on the
amounts so paid shall be deducted at the average rate of 5[R47] [tax] at which
the employee was liable to 5[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 6[R49] [***] section
206.
Appeals.
8. (1) An
employer objecting to an order of the 7[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. 8[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 contribution, 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 9[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 the9[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 10[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 ;
11[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 12[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 13[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.
Part
C
Approved gratuity funds14[R58]
[See sections 2(5),
15[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
16[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 circumstances of the fund
cease to warrant the continuance of the approval.
(2) The
16[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
16[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
16[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 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.
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 17[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 18[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 19[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 20[R67] [Assessing]
Officer mentioned in sub-rule (1), and in default of such communication, any
approval given shall, unless the 19[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 21[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 22[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. 23[R71]
24[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 25[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 26[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 ;
27[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 securities28[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 thereunder ; 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
to 81and 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]“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]“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. Section 80C has
now been replaced by section 88.
[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]“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
to 81.
[R27]Inserted by the Taxation Laws (Amendment) Act, 1970,
w.e.f. 1-4-1971.
[R28]For definition of “Government security”,
[R29]Substituted for “income-tax and super-tax” by the
Finance Act, 1965, w.e.f. 1-4-1965.
[R30]See rules 82 to 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” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R35]Substituted for “Commissioner” by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
[R36]Substituted for “Commissioner” by 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]“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]“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.
[R56]For definition of “Government security”,
[R57]Substituted for “income-tax and super-tax” by the
Finance Act, 1965, w.e.f. 1-4-1965.
[R58]See rules 98
to 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]“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.
[R75]Inserted by the Taxation Laws (Amendment) Act, 1970,
w.e.f. 1-4-1971.
[R76]For definition of “Government security”,