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TMI BlogRECOGNISED PROVIDENT FUNDSX X X X Extracts X X X X X X X X Extracts X X X X ..... 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; (f) "annual accretion", in relation to the balance to the credit of an employee means the yearly increase to such balance, from contributions and interest; (g) "accumulated balance due to an employee" means the balance to his credit, or portion thereof claimable by the employee under the regulations of the fund, on the day he ceases to be an employee of the employer maintaining the fund; (h) "regulations of a fund" means the specific regulations governing the constitution and administration of a particular provident fund; and (i) "salary" includes dearness allowance, if provided for in the terms of employment, but excludes all other allowances and perquisites. 3. Recognition to provident fund and its withdrawal.-(1) The approving authority may grant recognition to a provident fund, which in his opinion, satisfies the conditions prescribed in paragraph 4 and the rules made by the Board in this regard and may, at any time, withdraw such recognition if, in his opinion, the provident fund violates any of those conditions (2) An order granting recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply; or (ii) notified by the Central Provident Fund Commissioner under section 1(4) of the said Act, and such establishment shall be exempted from the operation of all or any of the provisions of any scheme mentioned in section 17 of the said Act; (g) the employer, subject to clause (h), shall not be entitled to recover any sum from the fund, except when the employee- (i) is dismissed for misconduct; or (ii) voluntarily leaves his employment otherwise than due to ill-health or other unavoidable cause before the end of the term of service specified in the regulations of the fund; (h) for the purposes of clause (g), the recovery made by the employer shall be limited to-- (i) the contributions made by him to the individual account of the employee; (ii) interest credited in respect of such contributions as per the regulations of the fund; and (iii) the accumulations thereof; (i) 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; (j) except as provided in clause (i) or as per conditions and restrictions prescribed, no portion of the balance to the credit of an employee shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11(4), such employee shall be allowed to withdraw from the balance amount 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 paragraph 11(2) had not been included in the total income. 6. Employer's annual contributions, when deemed to be income received by employee.-The portion of the annual accretion in the tax year to the employee's balance in a recognised provident fund consisting of- (a) contributions made by the employer exceeding 12% of the employee's salary; and (b) interest credited on the balance to the credit of an employee in so far as it is allowed at a rate exceeding such rate as fixed by the Central Government by notification, shall be deemed to have been received by the employee and included in his total income for that tax year and shall be liable to income tax. 7. Exemption for employee's contributions.-An employee participating in a recognised provident fund shall, in respect of his own contributions to his individual account in the fund in the tax year, be entitled to a deduction in the computation of his total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of accumulated balances due to employees, shall deduct from the accumulated balance at the time of payment, the amount payable under the rule and the provisions of Chapter XIX-B shall apply as if the accumulated balance were income chargeable under the head "Salaries". 11. Treatment of balance in newly recognised provident fund.-(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,- (a) showing the balance to the credit of each employee on such day; and (b) containing such further particulars as prescribed. (2) The account shall also show in respect of balance to the credit of each employee- (a) the amount thereof to be transferred to the employee's account in the recognised provident fund (hereinafter called his transferred balance); and (b) such "transferred balance" shall be shown as balance to his credit in the recognised provident fund on the date on which the recognition takes effect, and sub-paragraph (4) and paragraph 5(5) shall apply accordingly. (3) Any part of the balance to the credit of each employee in the existi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und or portion of it, transfers such fund or portion to trustees in trust for the participating employees, the transferred amount shall be deemed to be of the nature of capital expenditure. (2) When an employee receives the accumulated balance due to him from the fund, any portion of such balance representing the employee's share of the amount transferred to the trustees (without addition of interest and exclusive of employee's contributions and interest thereon) shall be deemed to be,- (a) employer's expenditure under 34; (b) incurred in the tax year in which the accumulated balance due to the employee is paid, provided an arrangement for deduction of tax at source has been made from the amount of such share by the employer. PART B APPROVED SUPERANNUATION FUNDS AND GRATUITY FUNDS 1. Interpretation.-In this Part, unless the context otherwise requires, "approving authority", "employer", "employee", "contribution" and "salary", in relation to superannuation funds and gratuity funds shall have, the meanings as assigned to those expressions in paragraph 2(a), (b), (c), (d) and (i) of Part A in relation to provident funds. 2. According approval to superannuation fund and its w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceding the year in which the said application is made) for which the accounts have been made up, if the fund has been in existence before the financial year in which the application for approval is made. (2) In addition to the documents referred to in sub-paragraph (1), the approving authority may require such further information to be furnished as he thinks proper. (3) If any alteration is made to the rules, constitution, objects or conditions of the fund after the date of the application for approval,-- (a) the trustees shall immediately inform such alterations to the Assessing Officer mentioned in sub-paragraph (1); and (b) failure to inform such alterations may result in the approval given, if any, be deemed to be withdrawn from the date on which the alteration took effect, unless the approving authority orders otherwise. 5. Contributions by employer when deemed to be income of employer.-If a 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. 6. Amount deemed to be income of employer.-When contributions by an employer (including the interest, if any) are repaid to the employer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch a fund shall furnish such returns, statement, particulars or information, as required by notice from the Assessing Officer within the specified period, not being less than twenty-one days from the date of the notice. PART C POWER TO MAKE RULES FOR PROVIDENT FUNDS, SUPERANNUATION FUNDS AND GRATUITY FUNDS 1. Power of Board to make rules for fund.-In addition to powers granted by Part A and Part B of this Schedule, the Board may make rules for a fund (provident fund or superannuation fund or gratuity fund) in respect of the following:- (a) to provide for the statements and information to be submitted alongwith an application for approval or recognition for a fund; (b) to provide for the returns, statements, particulars, or information which the Assessing Officer may require from the trustees of an approved superannuation fund or from the employer; (c) to limit the ordinary annual and other contributions of an employer to the gratuity fund or an approved superannuation fund; (d) to limit the contributions to a recognised provident fund by employees who are shareholders in the company; (e) to regulate investment or deposit of the moneys of a recognised or an approved fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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