chapter 6 part i.pdf
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CH APTER 6
Ret i reme nt Benef its
PART I RECOG N IZED PROV IDENT FU N D
Defini t ion - Section 2(48)
recognised provident fund means a provident fund recognised by the Commissioner inaccordan ce wit h Part I of th e Sixth Schedule;
Part I of Sixth Sche dule of th e Incom e Tax Ordinan ce, 20 01
1. Recognit ion of provident funds.
(1) The Com m issioner m ay accord recognit ion to any provident fund w hich, in h is op in ion,
compl ies w i th the requ i rements o f ru le 2 , and may a t any t ime, w i thdraw suchrecogni t ion i f , in h is op in ion, the c i rcumstances of the fund cease to warrant thecont inuance of the recogni t ion.
(2) An order accord ing recogni t ion shal l take ef fect on such date as the Com m issioner m ayf ix in accordance wi th such ru les as the Centra l Board of Revenue may make in th isbehal f , such date not be ing la ter than the last day of the f inancia l year in which theorder is made.
(3) An order accord ing recognit ion to a provident fund shal l not , un less the Com m issionerotherwise d i rects, be af fected by the fact that the fund is subsequent ly amalgamatedw i th ano ther p rov iden t fund on t he occur rence o f an am algam at ion o f t he under tak ingsin connect ion w i th w hich the tw o funds are m ainta ined or that i t subsequent ly absorbs
the who le o r a par t o f ano ther p rov iden t fund be long ing to an under tak ing wh ich iswhol ly or in par t t ransfer red to , or merged in , the under tak ing of the employerm a in ta in ing the f i r st -ment ioned fund .
(4) An order w i thdraw ing recogni t ion shal l take ef fect f rom such date as the Com m issionerm ay f ix.
(5) The Com m issioner shal l ne i ther re fuse nor w i thdraw recogni t ion of any provident fund,unless he has given to t he t rustees of t he fund a reasonable oppor t uni ty o f be ing heard.
2. Cond it ions for appro val . -
(1) In order that a provident fund may receive and reta in recognit ion i t shal l sat isfy thecondi t ions here inaf ter speci f ied and any other condi t ions which the Centra l Board ofRevenue m ay, by rules, prescr ibe -
(a) al l em ployees shall be em ployed in Pakistan , or shall be em ployed by anem ployer w ho se pr incipal place of b usiness is in Pakistan:
Provided that the Commissioner may, i f he th inks f i t , and subject to suchcondi t ions, i f any, as he th inks proper to at tach to the recogni t ion, accordrecogni t ion to a fund mainta ined by an employer whose pr inc ipa l p lace ofbusiness is not in Pakistan, provided the propor t ion of employees employed
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out side Pakistan does not exceed t en per cent ;
(b) the contr ibut ions of an em ployee in any year shal l be a def in i te prop or t ion of h issalary for th at year , and shal l be deducted by t he emp loyer f rom the em ployee'ssalary in t hat pro por t ion, a t each per iod ica l paym ent of such sa lary in that year ,and credi ted t o th e emp loyee's ind iv idual account in t he fund :
Provided that an em ployee, w ho reta ins h is em ploym ent w hi le serv ing in arm edforces of Pakistan or w hen t aken in to, or em ployed in , the nat ional serv ice underany law for t he t im e being in force, m ay, w heth er he receives f rom the em ployerany sa lary or not contr ibut e to the fu nd du r ing h is serv ice in the arm ed forces ofPakistan o r w hi le so t aken in to, or em ployed in , th e nat ional serv ice a sum notexceed ing the am ount he w ou ld have con t r ibu ted had he con t inued to serve theemployer ;
(c) the contr ibut ions of an em ployer to the ind iv idual account of an em ployee in anyyear shal l not exceed the amount of the contr ibut ions of the employee in thatyear , and shall be credi ted to the em ployee's ind iv idual account at in t erva ls notexceeding one year:
Provided that , subject to any ru les which the Centra l Board of Revenue maymake in th is behal f , the Commissioner may, in respect o f any par t icu lar fund,relax the p rovisions of th is clause -
( i) so as to perm it the paym ent of larger contr ibut ions by an em ployer toth e individual account s of em ployees wh ose salar ies do n ot , in each case,exceed f ive hund red rupees per m ont h;
( ii ) so as to permit the credit ing by em ployers to the ind iv idual accounts ofemployees of per iod ica l bonuses or other contr ibut ions of a cont ingentnature, where the ca lcu lat ion and payment of such bonuses or othercontr ibut ions is provided for on def in i te pr inc ip les by the regulat ions ofthe fund ;
(d) the em ployer shal l not be ent i t led to recover any sum what soever f rom the fund,save in cases where the employee is dismissed for misconduct or voluntar i lyleaves h is employment otherwise than on account of i l l -heal th or o therunavoidable cause before t he expirat ion o f t he t erm of serv ice speci f ied in th isbehal f in the regulat ions of t he fund:
Provided th at in such cases the recover ies made b y t he em ployer shal l be l imi t edto t he cont r ibut ions m ade by h im to t he ind iv idual account of the em ployee, andto in terest credi ted in respect o f such contr ibut ions in accordance wi th theregulat ions of the fund and accumu lat ions the reof ;
(e) the fund shal l be vested in tw o or m ore t ru stees or in the Off icia l Trustees under
a t rust which shal l not be recoverable save wi th the consent of a l l thebeneficiar ies;
( f) th e fund shall consist of cont r ibu t ions as above specif ied, received by th etrustees, or accumulat ions thereof , and of in terest credi ted in respect o f suchcontr ibut ions and accumulat ions, and of secur i t ies purchased therewith and ofany capital gains ar ising from th e tran sfer of capital assets of t he fund , and of nooth er sum s;
(g) the accum ulated balance due to an em ployee shal l be payable on the day he
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ceases to be an emp loyee of the em ployer m ainta in ing the fu nd:
Provided that not w i thstanding anyth ing conta ined in c lause ( f ) or (g): -
( i) a t the request m ade in w r i t ing by the em ployee w ho ceases to be anemployee o f the employer m a in ta in ing the fund , the t rus tees o f the
fund may consen t to re ta in the who le o r any par t o f the accumula tedba lance due to t he employee to be d rawn by h im a t any t im e on demand;
( ii ) w here the accumu lated balance due to an em ployee w ho has ceased tobe an em ployee is re ta ined in the fund in accordance w i th thepreceding clause, the fu nd m ay consist also of int erest in respect of suchaccumulated balance;
( ii i ) the fund m ay a lso consist o f any amo unt t ransfer red f rom the ind iv idualaccount of an em ployee in any recognised provident fund m ainta ined byhis form er emp loyer and the in terest in respect th ereof ;
(h) save as prov ided in clause (g) or in accord ance w ith such condit ions andrestr ict ions as th e Cent ral Board of Revenue m ay, by rules, specify, no po rt ion o f
the balance to t he credi t o f an em ployee shal l be payable to h im :
Provided that in order t o enable an employee t o pay th e amo unt of t ax assessedon h is to ta l income as determined under sub-ru le (4) o f ru le 7, he shal l been t i t led to w i thdraw f rom the ba lance to h is c red it in the recogn ised p rov iden tfund a sum no t exceed ing the d i f ference be tw een such amount and the am ountto w hich h e w ould have been assessed i f t he t r ansfer red balance refer red t o insub-ru le (2) o f ru le 7 had not been inc luded in h is to t a l incom e.
3. Em ployer 's annua l cont r ibutions, w hen deem ed to be incom e received by em ployee.
That por t ion of the annual accret ion in any year to thebalance at the credi t o f an employee par t ic ipat ing in a
recognised providen t fu nd as con sists of -
(a) contr ibut ions m ade by the em ployer in excess ofone-t ent h of th e salary or Rs.100,000,w hichever is low of the em ployee; and
(b) in terest credited on the balance to the credit o f t heemployee in so far as i t exceeds one- th i rd of thesalary of the employee or is a l lowed at a rateexceeding such rate as may be f ixed by th e FederalGovernment in th is behal f by not i f icat ion in theoff icial Gazette, shall be treated to have beenreceived by the em ployee in that year and shal l be
included in h is to t a l incom e for that year and shal lbe l iab le to incom e tax.
4. Exclusion from tot al incom e of accum ulated balance.
(1) Subject to such rules as m ay be m ade by th e Cent ral Board of Revenue in th is behalf , th eaccumulated balance due and becoming payable to an employee par t ic ipat ing in arecognised provident fu nd shal l be excluded f rom the com put at ion of h is to t a l incom e.
(2) The pro visions of sub-ru le (1) shall also apply wh ere, on the cessation of his
Employer contribution
exceeding Rs.100,000/- is taxable in
the hands of employee
Interest credit
exceeding 16% of
the balance amount
or 1/3rd
of salary is
taxable.
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employment , the employee ob ta ins emp loyment w i th any o ther emp loyer and theaccumu lated balance due and b ecoming payable to h im is t ransfer red to h is ind iv idualaccount in any recognised provident fund m ainta ined by such other em ployer .
5. Tax on accum ulated balance.-
Where the accumulated balance due to an employee par t ic ipat ing in a recognisedprovident fund is inc luded in h is to t a l incom e, the Com m issioner shall ca lcu late t he t o ta lo f t he var ious sums of t ax which w ould have been payable by the em ployee in respectof h is to ta l income for each of the years concerned i f the fund had not been arecognised provident fund and the amount by which such to ta l exceeds the to ta l o f a l lsums paid by, or on behal f o f such employee by way of tax for such years shal l bepayable by the em ployee in addi t ion t o any other t ax for w hich he m ay be liab le for th eincome year in w hich the accum ulated balance due to h im becomes payable.
6. Ded uction at source of tax payable on accum ulated balance.
The t rustees of a recognised provident fund, or any person author ised by theregulat ions of the fund to make payment of accumulated balance due to employeesshall , in cases where rule 5 applies, at the t ime an accumulated balance due to an
employee is pa id , deduc t there f rom the amount payab le under tha t ru le and theprovisions of Part V of Chapter X shall , so far as may be, apply as i f the accumulatedbalance were income chargeable under the head " Salary" .
7. Treatm ent of balance in new ly recognised provident fund .
(1) W here recogni t ion is accorded to a provident fund wi th exist ing balance, an accountsha ll be made o f t he fund u p to the day imm ed iate ly p reced ing the day on w h ich t herecogni t ion t akes ef fect show ing the balance t o th e credit o f each emp loyee on such dayand cont aining such furt her part iculars as th e Cent ral Board o f Revenue m ay prescr ibe.
(2) The accou nt referred to in sub-rule (1) shall also show in respect of th e balance to th ecred i t o f an em ployee the am ount t hereo f w h ich is to be t ransfe r red t o tha t em p loyee 's
account in the recognised provident fund, and such amount (here inaf ter ca l led h is`transferred balance') shall be shown as the balance to his credit in the recognisedprovident fund on the date on which the recogni t ion of the fund takes ef fect , and theprovisions of sub-ru le (4) and the proviso to c lause (h) o f ru le 2 shal l apply theret o.
(3) Any por t ion of the balance to the credi t o f an em ployee in the exist ing fund w hich is nott ransfer red to the recognised fund shal l be excluded f rom the accounts of therecognised fun d and shal l be l iab le to income tax in accordance w i th t he provis ions ofth is Ord inance, othe r t han t h is Par t .
(4) Subject to such rules as th e Cent ral Board of Revenue may make in th is behalf , th eCommissioner shall make a calculat ion of the aggregate of al l sums comprised in at ransfer red balance wh ich w ould h ave been l iab le to income-t ax if t h is Par t had b een in
fo rce f rom the da te o f t he inst i tu t ion o f t he fund , w i thou t regard to any tax wh ich m ayhave been paid on any sum, and such aggregate, i f any, shall be deemed to be incomereceived by the em ployee in the incom e year in w hich the recogni t ion of t he fund t akesef fect and shal l be inc luded in the employee's to ta l income for that year , and, for thepurpo ses of assessm ent, t he rem ainder of the t ransfer red balance shal l be d isregarded,but no other exempt ion or re l ie f , by way of re fund or otherwise, shal l be granted inrespect o f any sum com pr ised in such t ransfer red balance:
Provided that, in cases of ser ious accounting dif f iculty, the Commissioner may, subjectto t he said rules, m ake a sum m ary calculat ion o f such aggregate.
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(5) Not hing in th is rule shall affect th e r ights of th e persons adm inister ing an un recognised
provident fund or deal ing wi th i t , or wi th the balance to the credi t o f any ind iv idualem ployees, before recogni t ion is accorded, in any m anner w hich may be law fu l .
8. Accoun ts of recognised pro vident fun ds.
(1) The accounts of a recognised provident fund shal l be m ainta ined by the t rustees of thefund and shall be in such form and for such periods, and shall contain such part iculars,as m ay be prescr ibed .
(2) The accounts shal l be open to inspect ion at a ll reasonable t im es by income taxauthor i t ies, and th e t rustees shal l furn ish t o t he Comm issioner such abstracts thereof asm ay be prescr ibed.
9 . Trea tmen t of fund t ransfer red by em ployer to t rustee .
(1) W here an em ployer , w ho m ainta ins a provident fund (wh ether recognised or not ) forthe benef i t o f h is employees and has not t ransfer red the fund or any por t ion of i t ,t ransfers such fund or por t ion to t rustees in t ru st fo r the em ployees par t ic ipat ing in the
fund, the amount so t ransfer red shal l be deemed to be of the nature of capi ta lexpendi ture.
(2) W hen an em ployee par t ic ipat ing in such fund is pa id the accum ulated balance due toh im therefrom, any por t ion of such balance as represents h is share in the amount sotransfer red to the t rustees (wi thout addi t ion of in terest , and exclus ive of theem ployee's contr ibut ions and in t erest t hereon) shal l, i f the em ployer has m ade ef fect ivearrangement to secure that tax shal l be deducted at source f rom the amount of suchshare when pa id to the em ployee, be deemed t o be an expend i tu re by the em ployer,wi th in the meaning of sect ion 20, incurred in the tax year in which the accumulatedbalance due to t he em ployee is pa id.
10. Part iculars to be furnished in respect of recognised provident funds.
The t rustees of a recognised provident fund and any employer who contr ibutes to arecognised provident fund shal l , when required by not ice f rom the Commissioner ,w i th in such per iod (not be ing less than t w enty on e days f rom the date o f serv ice of t henot ice) , as m ay be specif ied in t he n ot ice, furn ish such ret urn, s tatem ent , par t icu lars orin form at ion, as the Comm issioner m ay require.
11. Provisions of th is Part to pre vail against regulat ions of th e fun d.
Where there is a repugnance between any regulat ions of a recognised provident fundand any provision of t h is Par t or o f t he ru les made t hereunder , the regulat ion shal l , tothe extent o f th e repugnance, be of no ef fect , and t he Com m issioner m ay, at any t im e,require that such repugnance shal l be remo ved f rom the regulat ions of the fu nd.
12. App eals.
(1) An em ployer object ing to an order of Com m issioner refus ing to recognise, or an orderwi thdrawing recogni t ion f rom a provident fund may appeal , wi th in s ix ty days of theservice of such order , to t he Cent ral Board of Revenue.
(2) The Centra l Board of Revenue m ay adm it an appeal a f ter the expirat ion of the per iodspecif ied in sub-rule (1), i f i t is sat isf ied that the appellant was prevented by suff icientcause f rom present ing i t w i th in that per iod.
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(3) The appeal shall be in such for m and shall be ver if ied in such m anner and shall be
accomp anied by such fee as m ay be p rescr ibed.
13. Provisions relat ing to rules.
In addi t ion to any pow er conferred by t h is Par t , the Centra l Board of Revenue m ay m akerules:-
(a) prescr ib ing the form of appl icat ion for recogni t ion and the stat em ent and oth erpar t icu lars and do cuments to be submi t t ed therew i th ;
(b) l imi t ing the contr ibut ions to a recognised provident fund by em ployees of acomp any, w ho are shareholders in th e comp any;
(c) provid ing for the assessment by w ay of penal ty of any considerat ion received byan employee for an assignment of, or creation of a charge upon, his beneficialin terest in a recognised provident fund ;
(d ) de te rmin ing the ex ten t to , and the m anner in , w h ich exem pt ion f rom payment
of tax m ay be granted in respect o f contr ibut ions and in t erest credited to theindiv idual accounts of em ployees in a provident fund f rom w hich recogni t ion hasbeen w i thdrawn;
(e) regulat ing the investm ent of the m oneys of a recognised provident fund ; and
( f ) general ly, to carry out the purposes of t h is Par t and to secure such fur t hercontro l over the recogni t ion of provident funds and the admin ist rat ion ofrecognised pro vident f unds as i t m ay deem requis ite .
14. Defini t ions.
In th is Par t , un less the cont ext o t herw ise requires ,
(a) "accum ulated balance due to an em ployee" m eans the balance to h is credi t , orsuch por t ion thereof as may be c la imable by h im under the regulat ions of thefund, on the day he ceases to be an employee of the employer mainta in ing thefund ;
(b) "annual accret ion" in re lat ion to the balance t o th e credit o f an em ployee, m eansthe increase t o such balance in any year , ar ising f rom contr ibut ions and in terest ;
( c) "ba lance to the c red i t o f an emp loyee" m eans the to ta l amount to the c red i t o fh is ind iv idual account in a provident fun d at any t im e;
(d) "cont r ibut io n" m eans any sum credi ted by or on behal f o f , any em ployee out o f
h is sa lary or by an emp loyer out o f h is ow n m oney, to t he ind iv idual account o fan emp loyee, but does not inc lude any sum credi ted as in terest ;
(e) "em ployee" m eans an em ployee par t ic ipat ing in a provident fund, but does notinclude a p ersonal or dom est ic servant ;
( f ) "em p loyer " m eans any person w ho m a in ta ins a p rov iden t fund fo r the bene f it o fhis or i t s em ployees, being an ind ividual, a com pany or an associat io n of p ersonsengaged in any business the prof i ts and gains whereof are chargeable to incometax under the head " Incom e f rom Business";
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(g) " regulat ions of fund" m eans the specia l body of regulat ions govern ing the
const i t u t ion and adm in ist rat ion of a par t icu lar provident f und; and
(h) "sa lary" inc ludes dearness a l lowance, i f the term s of em ploym ent so provide, butexcludes al l ot her al low ances and per quisites.
15. App lication of this Part. _
This Par t shall not apply to any provident fu nd to w hich t he Provident Funds Act , 1925(XIX of 1 925) app lies.
Relevant rule s (The Incom e Tax Rules, 200 2)
Rule 91 - Appl ication for recognit ion of pro vident fun d.-
(1) An appl icat ion for recogni t ion of a provident fund shal l be m ade, in w r i t ing, by the
employer m a in ta in ing the fu nd , se t t ing ou t the f o l low ing in fo rmat ion , namely :-
(a) the em ployer s nam e and the address of the employer s pr inc ipa l p lace of
business;
(b) the nam e of a l l em ployees, w hether in or out s ide Pakistan subscr ib ing to the
fund ;
(c) the p lace w here the accounts of t he fund are or w i l l be m ainta ined; and
(d) w here the fund is a l ready in existence, a copy of the last ba lance sheet of the
fund and deta i ls o f t he investm ents of the fund.
(2) A ver i f icat ion in the fo l low ing form shall be annexed to the appl icat ion, nam ely: -
We / I , the t rustee(s) o f the above named fund, do declare that what is s tated in the
above app l ica t ion is t rue to the bes t o f our /my in fo rmat ion and be l ie f , and tha t thedocum ents sent herew ith are the o r ig ina ls or t rue copies thereof .
(3) Subject to sub-ru le (4), the appl icat ion shal l be accom panied by the fo l low ing
docum ents, nam ely: -
(a) the or ig inal o f t ru st deed to be sighted by the Com m issioner ;
(b) a copy of the t rust deed to be reta ined by the Com m issioner ; and
(c) the ru les of the fund.
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Provided that i f the or ig ina l o f the t rust deed cannot convenient ly be produced, the
Commissioner may accept , in l ieu of the or ig ina l , a t rue copy cer t i f ied e i ther by a
M agist rate or in any m anner provided for in t he Companies Rules, 1984, in w hich case,
an addi t ional copy shal l be furn ished for re tent ion by t he Com m issioner .
(4) The appl icat ion shal l be lodged w i th the Com m issioner responsib le for the area/ju r isd ict io n in w h ich t he acco unt s o f t he fund ar e kep t , o r , if t he ac co unt s ar e kep tout s ide Pakistan, lodged w i th t he Comm issioner responsib le for t he area/ jur isd ic t ion in
w hich the local headquar ters for t he em ployer are si tuated.
Rule 92 - Decision on a pplication.-
(1) The Com m issioner m ay m ake such enquir ies and cal l for such fur t her in form at ion or
evidence as th e Com m issione r m ay consider necessary to decide th e applicat ion.
(2) The Com m issioner shall not i fy th e applicant, in w rit ing, of th e Com m issioner s decisionon t he appl icat ion.
(3) W here the Com m issioner decides to refuse an appl icat ion under ru le , the not ice
refer red t o in sub-ru le (2) shal l include a statem ent of reasons for t he refusal.
(4) Subject to sub-ru le (5), an order accord ing recognit ion to a provident fund shal l take
ef fect f rom the last day of th e m ont h in w hich the appl icat ion for recogni t ion is receivedby the Com m issioner or , a t the request o f th e em ployer , the last day of any later m ont h
in th e sam e f inancial year.
Rule 93 - W ithdraw al of recognit ion. -
Where the Commissioner decides to wi thdraw recogni t ion of a provident fund, the
Commissioner shal l not i fy the appl icant , in wr i t ing, o f the Commissioner s decis ion and such
not ice shal l inc lude a statem ent of reasons for th e w i thdraw al .
Rule 94 - Form of app eal in case of no n-recognit ion or w ithdraw al of recognit ion. -
(1) An appeal under sub-ru le (1) o f ru le 12 of Par t I o f the Sixth Schedule to the Ordinance
to the Comm issioner s decision t o refuse an appl icat ion for recogni t ion or to w i thdraw
recogni t ion shal l be in the fo l lowing form shal l be ver i f ied in the manner ind icatedthere in, namely: -
FORM OF APPEAL IN CASE OF NON -RECOGN ITION OR W TIHDRAW AL OF RECOGN ITION
To
The Federal Board of Revenue,
Islamabad/ Before t he Comm issioner (Appeals)
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The pet it io n of _____ em ployer(s) carrying on business, pro fession or vocation ______
at__________
Your pet i t ioner(s) appl ied t o / obt a ined sanct ion f rom the Com m issioner under Par t I o f th e SixthSchedule to the Income Tax Ordinance, 2001 for the recogni t ion of the provident fundmainta ined by h im ( them) for the benef i t o f h is ( the ir ) employees. The Commissioner has
refused recognit ion/ w i thdraw n recogni t ion for t he reason stated in h is order , dated ________,
of w hich a copy is at t ached.
For t he reasons set ou t b e low your pet i t ioner(s) subm it (s) that the fu nd should be conta ined t o
be recognised and pray (s) that t he Federal Board o f Revenue m ay be pleased to.
Accord recogni t ion
Cont inue the recogni t ion.
GROUND(s) OF APPEAL
(1 )
(2 )
(3 )
(4 )
(5 )
I /W e named above pe t i t ion t o dec lare tha t w hatever is sta ted above is t rue t o t he best o f o ur
in fo rmat ion and be l ie f .
Name_________________________ Signature______________________
Address_______________________
Date_________________________
(2) An appeal referre d to in sub-rule (1) shall be accom panied by a copy of a challan for Rs.100/ - pa id in Governm ent t reasury.
Rule 95 - Account s required to be m aintained by a re cognised pro vident fund .-
(1) A recognised provident fund shall prepare accoun ts at in terva ls of not mo re than tw elvemon ths .
(2) An account shal l be m ainta ined for each subscr iber to the fund and it shal l inc lude thepar t icu lars show n in the fo l lowing form , nam ely:-
Account closed.
Date
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Paid to em ployee
Lapsed to t he em ployer
Or to fund
Recovery by em ployer
Nam e_______________ Date of jo in ing Fund_______________
AnnexContr ibut ion by t he Employer
M onth and year Salary By employees Norm al Of cont ingent
nature,
Total in
co lumns 3,4 ,5 .
Tota l in t erest
on the amoun tshown i n
co lumn 6
1 2 3 4 5 6 7
Balance brought forw ard
July_________________________
August_______________________
June_________________________
Total:________________________
Exempt Not Exempt
Employer scon t r i bu t ion no t
exceeding
sta tu tory l imi t
In terest on sum inColum n 6 a t % but
not exceeding
sta tu tory l imi t
Contr ibut ionColum n 4 + 5
minus Colum n 8
In terest Column 7minus Colum n 9
Addi t ions to to ta lincome 10 p lus
Column 11.
Remarks
8 9 10 11 12 13
Adjustm ent on account of t em porary W ithdraw als account (Colum n 8 and 9 only) .
Adjustm ent on account of no n-payable W ithdraw als account Columns 10 and 11.
Total carr ied over .
I f desired co lum n 7 m ay be d iv ided in to sub-colum ns show ing separate ly the in terest on
columns and colum ns 4 and 5 respect ive ly .
Non-payable w i thdraw als Account Tem porary w i thdraw al Account
Am ount Advance Repayment
July Balance br ou ght
Forward__________________
July_____________________
August August___________________
June June_____________________
Total
(3) The t rustees of a recognised provident fund shal l furn ish to the Com m issioner an
abstract for the funds account ing per iod of the ind iv idual account of each employee
par t ic ipat ing in th e fund w hose incom e under th e head Salary is Rs. 24,000 or m oreper annum .
(4) The abstract shall -
(a) be in the form prescr ibed in sub-ru le (2), but shal l show only the to ta l o f the
var ious co lum ns thereof for fu nds account ing per iod; and
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(b) include an account of any tem porary w i thdraw als by the em ployees dur ing the
year and o f t he repayment t hereo f .
(5) The abstract shall be furn ished by th e tr ustees to th e Com m issioner responsible for th e
area in which the accounts of the fund are kept or to such jur isd ic t ion or funct ionalDivision as the Com m issioner m ay, in each case, direct.
(6) Subject to rule, th e abstract shall be fur nished -
(a) in the case of a com pany, on or before the f i rst day of August next fo l low ing the
funds account ing per iod or w i th in f i f t een days of t he expiry of s ix m ont hs f rom
the end of t he fund s account ing per iod, w hichever is la ter ; and
(b) in any ot her case -
( i) w here the funds account ing per iod ends at any t im e betw een the f i rst
day of July and the thir tyf irst day of December (both days inclusive), on
or before t he f i rs t day of August next fo l low ing;
o r
( ii ) in any oth er case, on or before the f i rs t day of Oct ober next fo l low ing the
end of t he funds account ing per iod.
(7) The account to be m ade under the provisions of sub-ru le (1) o f ru le 7 of Par t I o f the
Sixth Schedule to the Ordinance shal l show in respect o f each em ployee -
(a) the to ta l salary paid to the emp loyee dur ing th e per iod of par t ic ipat ion in the
prov iden t fun d ;
(b) the to t a l contr ibut ions m ade by, or in respect o f , t he em ployee;
(c) the to t a l in terest w hich has accrued thereon ; and
(d) so far as m ay be, th e percent age of th e em ployees salary in accord ance w ith
w h ich con t r ibu t ions have been made by t he em ployer and t he em ployee .
Rule 96 - Tim e l im it for subm ission of account s kept out side Pakistan. -
(1) W here the account s of a recognised provident fund are kept outs ide Pakistan, cer t i f iedcopies of the accounts shal l be suppl ied n ot la ter t han th e 15th Septem ber in each year
to a local representat ive of the em ployer in Pakistan.
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(2) The Com m issioner m ay, upon appl icat ion in w r i t ing, f ix a date la ter than the 15th
Septem ber as the dat e by w hich the cer t i f ied copies shal l be suppl ied.
Rule 97 - Limit on cont r ibution by e m ployers. -
The Com m issione r m ay relax th e l im its f ixed under clause (c ) of sub-rule (1) of rule 2 o f Part Io f the Sixth Schedule to the Ordinance for contr ibut ion of an employer to the ind iv idualaccount of an employee in any year provided that such contr ibut ion shal l not exceed the
fo l low ing l im i ts , nam ely:-
(a) the em ployer s aggregate contr ibut ion in any year inc lud ing the norm al contr ibut ion t o
th e individual accou nt o f any one em ployee, w hose salary does not exceed Rs. 1000 per
m onth , sha ll no t exceed doub le the amount o f t he con t r ibu t ion o f the em ployee in tha t
year; and
(b) the amo unt of the per iod ica l bonu ses and ot her contr ibut ion of a cont ingent naturew hich may be credi ted by an em ployer in any year to t he ind iv idual account of any one
employee sha ll no t exceed the am ount o f the con t r ibu t ion o f t he em ployee in tha t year .
Rule 98 - Lim it on contr ibut ions by certa in em ployees.-
W here an em ployee of a comp any ow ns shares in the com pany w i th a vot ing power exceeding
ten per cen t o f the who le o f such power , the sum o f the exempted con t r ibu t ions o f theem ployee and em ployer to th e recognised provident fun d m ainta ined by the company shal l not
exceed Rs. 1000 in any m ont h.
Rule 99 - Exclusion from tot al incom e o f accum ulated balances.-
For the purpose of ru le 4 of Par t I o f the Sixth Schedule to the Ordinance, the accumulated
balance due and becom ing payable to an em ployee par t ic ipat ing in a recognised provident fund
shal l be exem pt f ro m income t ax and shal l be excluded f rom the com putat ion of to t a l income.
Rule 100 - Treatm ent o f consideration for d eal ings w ith bene ficia l intere st. -
I f an em ployee assigns or creates a charge upo n his beneficial interest in a recogn ised pro vident
fund, t he Com m issioner shal l , on t he fact o f the assignment or charge com ing to h is know ledge,
g ive not ice to the employee that i f he does not secure the cancel la t ion of the assignment orcharge wi th in two months of the date of receipt o f the not ice, the considerat ion received for
such assignment or charge shall be treated as salary received by him in the year in which the
fact becam e know n to th e Com m ission er and shall be assessed accordingly.
Rule 101 - Treatm ent in certa in cases whe re recognit ion is w ithdraw n.-
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I f the Commissioner wi thdraws recogni t ion f rom a recognized provident fund, the balance to
the credi t o f each em ployee at t he end of the f inancial year pr ior to t he date of the w i thdraw al
of recogni t ion shal l be paid to the employee f ree of tax at the t ime when such employee
receives the accumulated balance due to h im and the remainder of the accumulated balance
due t o h im shal l be l iab le to t ax as i f the f und h ad never been recognized
Rule 102 - Investm ent of m oneys of a recognised provident f und.-
(1) W here the emp loyer is not comp any as def ined in c lause (7) o f sect ion 2 of the
Companies Ordinance, 1984, the contr ibut ions made by employees af ter the date of
recogni t ion of a provident fund and the in terest on the accumulated balance of such
contr ibut ion shall be w hol ly invested e i ther in secur it ies of t he nat ure speci f ied in c lause
(2)(b),(c),(d) or (e) of sect ion 20 of the Trusts Act, 1882, and payable both in respect of
capital and interest in Pakistan or in a Post Off ice Savings Bank Account in Pakistan or
deposited in National Savings, Federal Government securit ies or deposits in NCBs or
NBP, or , in the other government secur i t ies, or any other establ ished f inancia linst i tu t ions inc lud ing mutual funds subject to maximum of 20% of such deposi ts or
investm ent a t any t ime in the year .
(2) W here the employer is a company as def ined in c lause (7) o f sect ion 2 of the Com panies
Ordinance, 1984, a l l m oneys contr ibut ed to a provident fu nd (wh ether by th e com pany
or by t he em ployees or accru ing by w ay of in terest or o therw ise to such fund) shal l be
whol ly invested in accordance wi th the provis ions of sect ion 227 of the CompaniesOrdinance, 1984, or deposited or invested as in sub-ru le (1) or w i th t he pr ior approval o f
the Commissioner , in purchase of shares of a publ ic l imi ted company of fered for sa le
inv i t ing publ ic o f fer by the Federa l Government so, however , that the secur i t ies and
deposi ts in which the contr ibut ions made by the employees af ter the date ofrecogni t ion of a provident fund and the in terest on the accumulated balance on such
contr ibut ions are invested or deposited are payable in respect of capital, deposit and
int erest in Pakistan.
Rule 103 - Permi t ted w i thdrawals. -
(1) Subject to these ru les, w i thdraw als by em ployees f rom accumu lated balance m ay be
al low ed by t he t ru stees of a recognized providen t fu nd in t he fo l low ing ci rcum stances,
namely: -
(a) to pay expenses in connect ion w i th the i l lness of a subscr iber or a m em ber of h isfami ly ;
(b) to m eet the expendi ture on purchase of a m oto r cycle or scooter provided thatauthent icated copies of docum ents substant ia t ing such p urchase are de posited
w i th the t rus tees o f the fund ;
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(c) to pay th e overseas passage by reason of health or education of a subscriber or
a mem ber of h is fami ly ;
(d) to pay expenses in connect ion w i th m arr iages, funera ls or ceremon ies, w hich, by
the re l ig ion of the subscr iber , i t is incumbent upon h im to per form and in
connect ion w i th w hich it is ob l igatory that expendi t ure should be incurred;
(e) to pay expenses in connect ion w i th the per form ance of Haj by the subscr iber ;
( f ) to meet the expendi ture on bui ld ing or purchasing a house or a si te for a house,
provided that the documents substant ia t ing the bui ld ing or purchase of such
house, or t he purchase of such s ite , are deposited w i th t he t rustees of the f und;
(g) to m eet the expendi ture on repairs, renovat ion or extension of a resident ia l
house belonging to the subscr iber ;
(h) to pay prem ium s on pol ic ies of insurance on the l i fe of the subscr iber or o f h is
wi fe provided that the pol icy is assigned to the t rustees of the fund or at the ir
d iscret ion deposi ted wi th them and that the receipt granted by the insurance
company fo r the p remium s is f rom t im e to t ime handed over to the t rustees fo r
inspect ion by the Com m issioner ;
( i) to purchase shares of a publ ic l imi t ed comp any for investm ent as per ru les of
th is Chapt er;
( j) in th e case of a subscriber w ho has att ained th e age of f i f t y years on th e date on
w h ich w i thdrawa l i s perm i t ted -
( i) subject to sub-ru le (2), to meet the expendi ture on the purchase of a
house o r const ruc t ion o f a house on land ow ned by h im or a m ember o f
his fam ily anyw here in Pakist an;
( ii ) subject to sub-ru le (3), t o m eet expendi ture on the purchase ofagr icu l tura l land f rom Government ;
( ii i ) to repay a loan taken f rom a f inancial inst i t u t ion, provided that the
subscr iber shal l , wi th in a per iod of two weeks f rom the date of
wi thdrawal produce sat is factory ev idence before the t rustees to showthat the advance has been ut i l ised for t he purpo se for w hich it w as draw n
fa i l ing wh ich the en t i re amount o f w i thdrawa l toge ther w i th in te res t
accrued thereon shal l for t h w i th become repayable to the fund in alumpsum; and
(iv) w itho ut assigning any reason; or
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(k) in the case of an em ployee proceeding on leave preparatory to ret i rement , a t
the d iscret ion of the t r ustees of t he fees, w i tho ut assigning any reason, provided
that where an employee re jo ins duty on the expiry of h is leave, the amount
w i thdrawn toge ther w i th the in te res t accru ing thereon a t the ra te a l lowed by
the fund shal l be repa id fo r t hw i th in to t he fund in a lum p sum.
(2) The f irst instalm ent of a w ithd raw al und er sub-clause ( i) or clause ( j) of sub-rule (1) shallbe a l lowed to be d rawn on ly a f te r an agreement has been execu ted be tween the
subscr iber and t he t ru stees of th e fund t o t he ef fect that the subscr iber shal l expend t he
fu l l amount of the sa id advance towards the purchase or the bui ld ing of a houses as
cla imed at the ear liest possib le oppor t uni ty and i f t he actual amoun t so expended is less
than t he amo unt o f perm i t ted w i thdrawa l the subscriber sha ll repay the d i f fe rence in to
the fun d for t hw i th and fu r ther t hat i f th e sa id house is so ld or o t herw ise a l ienated by i ts
owner to any other person while the subscriber is st i l l in service, the subscriber shall
fo r thwi th repay in to the fund the en t i re amount o f the w i thdrawa l toge ther w i th
in terest accrued thereon in lum p-sum .
(3) The f irst instalm ent of a w ith draw al und er sub-clause ( i i) of clause ( j) of sub-rule (1) shall
be a l lowed to be drawn only af ter an agreement has been executed between the
subscr iber and t he t ru stees of th e fund t o t he ef fect that the subscr iber shal l expend t he
fu l l amount of the sa id advance towards the purchase of the sa id p iece of land at the
ear l iest possib le oppor tuni ty and i f the actual amount so expended is less than the
amount o f perm i t ted w i thdrawa l the subscriber sha ll repay the d i f fe rence in to the fundfor t hw i th and fur t her that i f the sa id house is so ld or o therw ise a l ienated by i ts owner t o
any other person while the subscriber is st i l l in service, the subscriber shall forthwith
repay in to the fun d the en t i re am ount o f the w i thdrawa l toge ther w i th in te rest accrued
thereon in lum p sum .
Rule 104 - Limits on W ithdraw als. -
(1) W ithdr awals perm it ted under these ru les shal l not exceed the fo l low ing l imi t s , nam ely: -
(a) in the case of wi th draw als perm it ted under clause (a) , (b) (c) or (d) o f sub-ru le (1)
of ru le 103, s ix months sa lary of the subscr iber or the to ta l o f accumulated
balance to his credit , w hichever is th e less;
(b) in th e case of w ith draw als perm itt ed und er clause (d) of sub-rule (1) of rule, sixmonths sa lary of the subscr iber or twenty f ive thousand rupees or / o f the to ta l
o f t he accum ulated balance to h is credi t , w hichever is the low est ;
(c) in th e case of w ithd raw als perm itt ed und er clause (f) or (g) of sub-rule (1) of
ru le , th i r ty-s ix months sa lary of the subscr iber or the to ta l o f the accumulated
balance to h is credit , wh ichever is th e less;
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(d) in the case of w i thdr awals perm it ted under c lause (h) o f sub-ru le (1) o f ru le ,
e ighteen m ont hs sa lary of th e subscr iber or t he to ta l o f t he accum ulated balance
to h is credi t , w hichever is the less, provided t hat th is restr ic t ion shal l apply to
each w i thdrawa l and no t to the to t a l w i thdrawa l ;
(e) in th e case of w ith draw als perm itt ed und er clause ( i) of sub-rule (1) of rule, sixmonths sa lary of the subscr iber or ten thousand rupees or the to ta l o f theaccumu lated balance t o h is credi t , w hichever is the low est ;
( f) in th e case of w ith draw als perm itt ed und er sub-clause ( i), ( i i ) and ( i i i ) of clause ( j)
o f sub-ru le (1) o f ru le , twentyfour months sa lary of the subscr iber or e ighty
percent of the to ta l o f the accumulated balance to h is credi t , whichever is the
less;
(g) in th e case of w ith draw als perm itt ed und er sub-clause ( iv) of clause ( j) of sub-
ru le (1) o f ru le , s ix ty percent of the to ta l o f the accumulated balance to the
subscriber; an d
(h) in the case of w i thdraw als perm it t ed under clause (k) o f sub-ru le (1) o f ru le ,
n inety percent o f th e accum ulated balance to t he subscr iber .
(2) For the purpo se of ru le and th is ru le : -
(a) accumu lated balance m eans the to t a l o f the accumu lat ions of exempt edcontr ibut ions and exempted in terest conta ined in the balance to the credi t o f
the em ployee a t the t im e o f w i thdrawa ls;
(b) fami ly means the em ployees w i fe , legi t im ate ch ildren, s tep ch i ldren, parents,sisters and brot hers w ho res ide w i th t he em ployee and are w hol ly dependent on
h im; and
(c) salary m eans th e salary as def ined in clause (h) of rule 14 of Part I of the Sixth
Schedule to the Ordinance to which the employee is ent i t led at the t ime whenthe w i thdraw al is granted.
Rule 105 - Second w ithdraw als. -
(1) Save as prov ided in sub-ru les (2), (3), (4) and (5), no second wit hd raw al fro m arecognized provident fund shal l be permit ted unt i l the sum f i rs t wi thdrawn has been
ful ly repaid.
(2) A w i thdraw al m ay be perm it t ed for the purposes specif ied in c lause (h) o f sub-ru le (1) o f
ru le 110, no tw i thstand ing tha t the sum w i thdrawn fo r any o ther purpose has no t been
repaid.
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(3) Subsequent w ith draw als fo r th e pu rposes specif ied in clause (h) of sub-ru le (1) of rule
103 may be perm i t ted , no tw i thstand ing tha t t he sum or sum s prev iously d raw n fo r t he
sam e purpose has or have not been repaid.
(4) A w i thdraw al for any one of the purposes specif ied in sub-ru le (1) o f ru le 103 oth er than
that speci f ied in c lause (a) o f that sub-ru le may be perm it t ed notw i thstanding that t hesum o r sums w i thdraw n fo r t he purp oses of c lause (e) o f sub-ru le (1) has or have no tbeen repaid.
(5) A w i thdraw al for any of the purp oses specif ied in sub-ru le (1) o f ru le 103 oth er than
tho se specif ied in c lauses (f ) and (h) o f th at sub-ru le m ay be perm it ted not w i thstanding
that the sum previously w i thdraw n for the purpo ses of c lause (d) o f sub-ru le (1) has not
been repaid.
Rule 106 - Repaym ent of am ounts w i thdrawn. -
(1) W here any w ith draw al is al low ed fo r a pu rpose specif ied in clause (f) , (h), ( i) , ( j) or (k) of
sub- ru le (1) o f ru le 103 , the amount w i thdrawn need no t be repa id .
(2) Subject to sub-ru les (3) and (4), w here a w i thdraw al is a l low ed for a purpo se oth er than
tho se refer red to in sub-ru le (1) , the am ount w i thdraw n shal l be repaid in not m ore than
for ty-e ight equal month ly insta lments and shal l bear prof i t in accordance wi th the
fo l low ing, nam ely: -
(a) W ithdraw als w hich are repaid is not
m o r e t han tw e lve mon th l y
insta l lments.
The rate o f m ark-up f ixed by the Federa l
Government under ru le 3(b) of Par t - I o f the
Sixth Schedule t o t he Ord inance payable in
the fo rm o f one add i t iona l insta lment .(b) W ithdr awals w hich are repaid in m ore
than twe l ve bu t no t m o r e t han tw en ty -
four m onth ly insta l lm ents .
The rate o f m ark-up f ixed by the Federa l
Government under ru le 3(b) of the Sixth
Schedule to the Ordinance payable in t he
fo rm o f tw o add i t iona l insta l lm ents.
(c) W ithdr awals w hich are repaid in m ore
than tw en ty -f ou r bu t no t m o r e t han
th i r t y-six m ont h ly insta l lmen ts.
The rate o f m ark-up f ixed by the Federal
Government under ru le 3(b) of Par t - I o f the
Sixth Schedule t o t he Ord inance payable in
the form of three addi t ional insta llment s.
(d) W ithdr awals w hich are repaid in m ore
than th i r t y-six m ont h ly insta lm ents.
The rate o f m ark-up f ixed by the Federa l
Government under ru le 3(b) of Par t - I o f theSixth Schedule t o t he Ord inance payable in
the fo rm o f four add i t iona l insta lment .
(3) For the purposes of sub-ru le (2) and at the d iscret ion of the t rustees of the fund, prof i t
m ay be recovered on t he amo unt w i thdrawn or t he ba lance thereo f ou ts tand ing f rom
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t im e to t ime a t 1 per cen t above the ra te w h ich is payab le fo r t he t im e be ing on the
balance in the fund t o th e credi t o f t he subscr iber .
(4) W here an em ployee contr ibut ing to the fund e lects not to receive any prof i t accru ing on
his accumulated balance, no prof i t shal l be charged on the amount wi thdrawn by h im
f r om the f und .
(5) The em ployer shal l deduct such insta lm ents payable under sub ru le (2) f rom t he
employees sa lary and pay them to the t rustees commencing f rom the second month ly
payment m ade af te r the w i thdrawa l o r , in the case o f an em ployee on leave w i thou t
pay , f rom the second m onth ly insta lment a f te r h is re tu rn t o du t y .
(6) In the case of defaul t o f repayment of insta lm ents under subru les (2) and (5), the
Commiss ioner may a t h is d isc re t ion , o rder tha t the amount o f w i thdrawa l o r the
amo unt o utstanding shal l be added to the t o ta l incom e of the em ployee for the year in
w hich the de fault o ccurs and th e em ployee shall be assessed accord ingly.
Rule 107 - Pow er to re lax cond it ions. -
Notwi thstanding anyth ing conta ined in ru les 103, 104, 105 or 106, the Commissioner may in
specia l ci rcumstances to be recorded in w r i t ing re lax the condi t ions for w i thdraw als f rom and
repayment t o the fund .
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