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Recognised Provident Funds

SCHEDULE 04 - Act - SCHEDULES - Income-tax Act, 1961 - SCHEDULE 04 - The Fourth Schedule PART A [See sections 2(38), 10(12), 10(25), 36(1)(iv), 187(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 H .....

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n 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 empl .....

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sites. According and withdrawal of recognition. 3. (1) The 2[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal 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 : 3[Provided that in a case where recognition has be .....

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fund of an establishment in respect of which a notification has been issued by the Central Government under sub-section (2) of section 16 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952).] (2) An order according recognition shall take effect on such date as the 6[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal Commissioner or] Commissioner] may fix in accordance with any rules the Board may make in this behalf, such date not being .....

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e 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 . 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 .....

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; (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 spec .....

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ment which has been notified by the Central Provident Fund Commissioner under sub-section (4) of section 1 of the said Act, and such establishment shall obtain exemption under section 17 of the said Act from the operation of all or any of the provisions of any scheme referred to in that section;] (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 ac .....

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ayable 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 9[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal Commissioner or] Commissioner] may, if .....

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vice 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 .....

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ual 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 which the Board may make in this behalf, the 11[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal 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 emplo .....

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ax 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 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 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 ann .....

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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 14[***]. 15[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 16[section 80C].] E .....

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f the employer's business or other cause beyond the control of the employee, 17[or] 18[(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 recognised provident fund maintained by 70[such other employer; or]. 71[(iv) if the entire balance standing to the credit of the employee is transferred to his account under a pension sche .....

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ods 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 provi-sions of rule 8 not being applicable, the 19[Assessing] Officer shall calculate the total of the various sums of 20[tax] which would have been payable by the emp-loyee in respect of his total inc .....

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h 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 additio .....

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ovisions 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 B .....

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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 22[***] 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 23[Assessing] Officer shall make a calculation of the aggregate of all sums comprised in a transferred balance which would have been l .....

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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 24[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal 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 deali .....

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25[Assessing] Officers such abstracts thereof as the Board may prescribe. Appeals. 13. (1) An employer objecting to an order of the 26[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal 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 .....

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cumulated 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 prev .....

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vident 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 securities 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 exempt .....

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nds [See sections 2(6), 10(13), 10(25)(iii), 36(1)(iv), 2987(1)(e), 192(5), 30[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 31[69[Principal Chief Commissioner or] Chief Commissioner or 69[Prin .....

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he 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[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal 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 34[69[Principal Chief Commissioner or] Ch .....

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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 employ .....

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e instrument under which the fund is established and by two copies of the rules 36[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[69[Principal Chief Commissioner or] .....

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cipal Chief Commissioner or] Chief Commissioner or 69[Principal 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 40[***] to be the income of the employer of the previous year .....

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rs, 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 whic .....

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rescribed. 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. P .....

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. (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 49[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 emplo .....

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an approved superannuation fund ; (e) determining the extent to, and the manner in, which exemption from payment of 51[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 appro .....

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ssigned to those expressions in rule 2 of Part A in relation to provident funds. Approval and withdrawal of approval. 2. (1) The 53[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal 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 54[69[Pri .....

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with the reasons for such withdrawal and the date on which the withdrawal is to take effect. (4) The 56[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal 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 o .....

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tirement 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 57[Assessing] .....

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ich such accounts have been made up, but the 59[69[Principal Chief Commissioner or] Chief Commissioner or 69[Principal 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 60[Assessing] Officer mentioned in sub-rule (1), .....

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tion 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 62[***] to be the income of the employer of the previous y .....

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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 65[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 66[Assessing] Officer may require.] Provisions relating to rules. 9. (1) In addition to any power .....

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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 f .....

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.e.f. 1-4-2009, before it was read as, "31st day of March, 2009", earlier Substituted for " 31st day of March, 2008" by Finance Act, 2008, w.e.f. 1.4.2008. Earlier it was substituted for " 31st day of March, 2007" by the Finance Act, 2007, w.e.f.1-4-2007. Further substituted vide Finance Act, 2011 w.e.f. 1.1.2011, before it was read as, 31st day of December, 2010 Further Substituted vide Finance Act, 2012, w.e.f. 01-04-2012, before it was read as:- "the 31st da .....

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which the provisions of sub-section (3) or sub-section (4) of section 1 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) apply, and such establishment has been exempted under section 17 of the said Act from the operation of all or any of the provisions of any Scheme referred to in that section;" 9. Substituted for "Commissioner" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 10. Inserted by the Finance Act, 1974, w.e.f. 1-4 .....

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ction 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. 17. Inserted by the Finance Act, 1974, w.e.f. 1-4-1975. 18. Inserted by the Finance Act, 1974, w.e.f. 1-4-1975. 19. Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 20. Substituted for "inco .....

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ome-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 26. Substituted for "Commissioner" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 27. Inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971. 28. Substituted for "income-tax and super-tax" by the Finance Act, 1965, w.e.f. 1-4-1965. 29. "88(2)(vii)" should now be substituted for "87(1)(e)". 30. Substituted for "206(2)" by the Finance Act, 198 .....

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e Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 36. 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. 37. Substituted for "Commissioner" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 38. Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 39. Substituted for "Commissioner" by the Direct Tax Laws (Amendment) Act, .....

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" omitted by the Finance Act, 1987, w.e.f. 1-6-1987. 46. Substituted for "Commissioner" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 47. Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 48. Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 49. Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 50. Inserted by .....

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