The Fourth Schedule
Recognised Provident Funds3[R2]
[See sections 2(38), 10(12),
10(25), 36(1)(iv), 4[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
5[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 5[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 5[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 6[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;
7[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 rules 8[R9] which the Board may make in this behalf, the 9[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 recognized 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 10[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 11[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 12-13[R13] [***].
14[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 15[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, 16[R16] [or]
17[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 recognized provident fund maintained by such other
employer.
Explanation.—Where the accumulated balance due and becoming payable to an employee
participating in a recognized provident fund maintained by his employer
includes any amount transferred from his individual account in any other recognized
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 18[R18] [Assessing]
Officer shall calculate the total of the various sums of 19[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 19[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
20[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 21[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 22[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 23[R24] [Assessing]
Officer such abstracts thereof as the Board may prescribe.
Appeals.
13. (1) An employer objecting
to an order of the
24[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
mayprescribe.
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.
25[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;
26[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 securities27[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 28[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 funds29[R30]
[See sections 2(6), 10(13),
10(25)(iii), 36(1)(iv), 30[R31] 87(1)(e), 192(5), 31[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 32[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 33[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 33[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 33[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—
34[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 35[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
36[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 37[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 38[R41] [Assessing]
Officer mentioned in sub-rule (1), and in default of such communication any
approval given shall, unless the 37[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 39[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.
40[R44] 6. Where
any contributions made by an employer, including interest on contributions, if any,
are paid to an employee during his lifetime 41[R45] [in
circumstances other than those referred to in clause (13) of section
10], 42[R46] [tax]
on the amounts so paid shall be deducted at the average rate of 42[R47] [tax]
at which the employee was liable to 42[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 43[R48] [***]
section 206.
Appeals.
8. (1) An
employer objecting to an order of the 44[R49] [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.45[R50]
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 46[R51] [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 46[R52] [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 47[R53] [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 ;
48[R54] [(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 49[R55] 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
50[R56] [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 funds51[R57]
[See sections 2(5), 52[R58] [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 53[R59] [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 53[R60] [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 53[R61] [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 53[R62] [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 54[R63] [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 55[R64] [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 56[R65] [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 57[R66] [Assessing]
Officer mentioned in sub-rule (1), and in default of such communication, any
approval given shall, unless the 56[R67] [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 58[R68] [***]
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 59[R69] [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.60[R70]
61[R71] [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 62[R72] [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 63[R73] [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 ;
64[R74] [(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 securities65[R75] 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. For details, see Income-tax Act.
[R2]See rules 67 to 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. 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]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 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. For details, see Income-tax Act.
[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]Words “sub-section (1) of” omitted by the Finance Act, 1987, w.e.f. 1-6-1987.
[R49]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R50]See rule 97 and Form No. 43
[R51]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[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]Inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971
[R55]For definition of “Government security”
[R56]Substituted
for “income-tax and super-tax” by the Finance Act, 1965, w.e.f. 1-4-1965.
[R57]See rules 98 to 111 and Form No. 44 for form of appeal
[R58]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973
[R59]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[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 “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R64]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.
[R65]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R66]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R67]Substituted
for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.
1-4-1988.
[R68]Words “and super-tax” omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[R69]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R70]See rule 111 and Form No. 44
[R71]Inserted
by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.
[R72]Substituted
for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.
1-4-1988.
[R73]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R74]Inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.
[R75]For definition of “Government security”