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TMI BlogAPPROVED PROVIDENT FUNDS, APPROVED SUPERANNUATION FUNDS, APPROVED GRATUITY FUNDSX X X X Extracts X X X X X X X X Extracts X X X X ..... sequently amalgamated with another provident fund on the occurrence of an amalgamation of these 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 any 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 approved provident funds. 3. In order that a provident fund may receive and retain approval, it shall, subject to the provisions of paragraph 4, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployment 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 (h) of paragraph 3 — (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 clause (a), the fund may consist also of interest in respect of such accumulated balance. (c) the fund may also consist of any amount transferred from the individual account of an employee in any approved provident fund maintained by his former employer and the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming payable to an employee participating in an approved provident fund shall be excluded from the computation of his total income— (a) if he has rendered continuous service with his employer for a period of five years or more; (b) 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 of discontinuance of the employee's business or other cause beyond the control of the employee; or (c) if, on the cessation of his employment, the employee obtains employment with any other employer, to extend the accumulated balance due and becoming payable to him is transferred to his individual account in any approved provident fund maintained by such other employer. (2) Where the accumulated balance due and becoming payable to an employee participating in an approved provident fund maintained by his employer includes any amount transferred from his individual account in any other approved provident fund or funds maintained by his former employer or employers, then, in computing the period of continuous service for the purposes of clause (a) or clause (b) of sub-paragraph (1), the period or the periods f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be excluded from the accounts of the approved fund and shall be liable to income-tax in accordance with the provisions of this Code, other than this Part. (4) Subject to such rules as the Board may make in this behalf, the 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 financial year in which the approval of the fund takes effect and shall be included in the total income of the employee for that financial 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. (5) Nothing in this paragraph shall affect the rights of the persons administering an unapproved provident fund of dealing with it, or with the balance to the credit of any individual employee before app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the guidelines framed by the Central Government in this behalf. Provisions relating to rules. 15. The Board may, for the purposes of this Part, prescribe:— (a) the statements and other information to be submitted along with an application for approval; (b) limiting the contributions to an approved provident fund by employees of a company who are shareholders in the company; (c) regulating the investment or deposit or the moneys of an approved provident fund; (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 provident fund; (e) determining the extend to and the manner in which exemption from payment of tax may be granted in respect of contributions and interest credited to the individual accounts of employees in a provident fund from which approval has been withdrawn; and (f) generally, to carry out the purposes of this Part and to secure such further control over the approval of provident funds and the administration of approved provident funds as it may deem requisite. Interpretations in this Part. 16. In this Part, unless the contex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) The Commissioner shall neither refuse nor withdraw approval to any superannuation fund or any part of a superannuation fund unless he has given the trustees or that fund an opportunity of being heard in the matter. Conditions for approval. 2. 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 rule 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 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. 3. (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utions 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 section 198. Appeals. 7. (1) An employer objecting to an order of the Commissioner refusing to accord approval to a superannuation fund of an order withdrawing such approval may appeal, within a period of sixty days of such order, to the Board. (2) The appeal shall be in such form verified in the manner and accompanied by such fees as the Board may prescribe. Liability of trustees on cessation of approval. 8. 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. 9. The trustees of an approved superannuation fund and any employer who contributes to an approved superannuation fund shall, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the approval is to take effect, and, where the approval is granted subject to conditions, those conditions. (3) The 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 Commissioner shall neither refuse nor withdraw approval to any gratuity fund unless he has given the trustees or that fund an opportunity of being heard in the matter. Conditions for approval. 2. 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 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within a period of sixty days of such order, to the Board; (2) The appeal shall be in such form, verified in the manner and accompanied by such fee as the Board may prescribe. Particulars to be furnished in respect of gratuity funds. 8. The trustees of an approved gratuity fund and any employer who contributes to an approved gratuity fund shall, when required by notice from the 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 Assessing Officer may require. Provisions relating to rules. 9. (1) The Board may, for the purposes of this Part, prescribe— (a) 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; (c) regulating the investment or deposit of the moneys of an approved gratuity fund; (d) providing for the assessment by way of penalty of any consideration received by an employee for any assignment of, or creation of a charge upon, his beneficial interest in an approved gratuity fund; (e) providing for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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