Exemption from production of Estate Duty Clearance Certificate by the legal heirs of deceased members of provident funds governed by Central Board of Trustees of the Central Provident Fund and also provident funds referred to in section 80C of the I.T. - Income Tax - 381/1984

Exemption from production of Estate Duty Clearance Certificate by the legal heirs of deceased members of provident funds governed by Central Board of Trustees of the Central Provident Fund and also provident funds referred to in section 80C of the I.T. Act, 1961 Circular No. 381 Dated 1/5/1984 Attention is invited to Board's Circulars No. 263 (F. No. 296/8/76-ED), dated November 29, 1979, [See [1981] 132 ITR (St.) 7] and No. 343 (F. No. 296/3/78-ED-Vol-II), dated May 29, 1982 [See [1982] 138 ITR (St.) 6], wherein instructions were issued that the Central Board of Trustees of the Central Provident Fund and trustees of provident funds referred to in section 80C of the Income-tax Act, 1961, could make payment to the extent of Rs. 25,000 from the balance at the credit of a deceased member of the provident fund to the claimant, without production of estate duty clearance certificate, subject to certain conditions. For settling the cases under the Employees Deposit Linked Insurance Scheme, 1976, and the Coal Mines Deposit Insurance Scheme, 1976, it was decided that the insurance benefit under the two schemes up to Rs. 5,000 may be paid direct to legal heirs/nominees without insisting upon estate duty clearance certificate. If the amount, however, exceeds Rs. 5,000 but does not exceed Rs. 10,000, the claimant could submit an affidavit and an indemnity bond as is required for payment under the Provident Fund Scheme. 2. Keeping in view the revised exemption limit of Rs. 1,50,000 provided by the Estate Duty (Amendment) Act, 1982, it has been decided to increase the limit of Rs. 25,000 mentioned above to Rs. 50,000, subject to the following: (i) Though the trustees can make payments up to Rs. 50,000 without the production of estate duty clearance certificate, their statutory liability remains unaffected. (ii) If subsequently any amount is claimed by the estate duty authorities due to any liability arising under the Estate Duty Act, the liability would be met from the Reserve and Forfeiture Account of the Fund and realised subsequently by the trustees, wherever possible, from the payees on the strength of the indemnity bond furnished by them. 3. In view of the above and in their own interest, the trustees of the provident funds are advised to ensure that the following conditions are satisfied: (i) The claimant files an affidavit to the effect that the property passing on the death of the deceased member does not attract estate duty; (ii) The claimant furnished an indemnity bond/undertaking to indemnify the trustees of the provident fund against any liability on account of estate duty that may arise. (Sd.) S.C. Tiwari, Secretary, Central Board of Direct Taxes.