Payment of gratuity and pension to the legal heirs, etc., of the deceased employees-Question regarding estate duty clerance certificate - Income Tax - 396/1984

Payment of gratuity and pension to the legal heirs, etc., of the deceased employees-Question regarding estate duty clerance certificate Circular No. 396 Dated 28/9/1984 By Board's Circular No. 263 dated November 29, 1979 (See [1981] 132 ITR (St.) 7), instructions were issued that the Central Board of Trustees of the Central Provident Fund could make payment to the extent of Rs. 25,000 from the balance at the credit of the deceased member of the provident fund to the claimant, without production of estate duty clearance certificate, subject to certain conditions. This procedure was also made applicable for settling the cases under the Employees' Deposit Linked Insurance Scheme, 1976, the Coal Mines Deposit Linked Insurance Scheme, 1976, and to all provident funds referred to in section 80C of the Income-tax Act, 1961, by Board's Circular No. 343 dated May 29, 1982 (See [1982] 138 ITR (St.) 6). 2. The matter has been further examined and it has been decided to extend the concession in respect of payment of gratuity and pension subject to the following conditions: (i) Though the employer can make payment up to Rs. 25,000 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 on account of any liability arising under the Estate Duty Act, the liability may be met by the employer who may recover the amount from the payees on the strength of the indemnity bond furnished by them. 3. In view of the above, the employers are advised to ensure: (i) the claimant files an affidavit to the effect that the property passing on the death of the deceased employee does not attract estate duty; (ii) the claimant furnishes an indemnity bond undertaking to indemnify the employer against any liability on account of estate duty that may arise before the amounts referred to in Para 1 are paid to the legal heirs, etc. (Sd.) A.K. Fotedar, Under Secretary, Central Board of Direct Taxes.