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PART VI
RECOGNITION OF PROVIDENT FUNDS

69. Application for recognition of provident fund.- (1) An application for recognition of a Provident fund shall be made by the employer maintaining the fund for which recognition is sought, setting out the following information, namely:-

(a) Name of employer, his address, business, profession, etc. and also his principal place of business.

(b) Number of employees subscribing to the fund:-
(i) in Pakistan; and
(ii) outside Pakistan.
(c) Place where the accounts of the fund are or will be maintained.
(d) If the fund is already in existence:-
(i) a copy of the last balance sheet of the fund; and
(ii) details of investments of the fund.

(2) A verification in the following form shall be annexed to the application, namely:-
We/I, the trustee(s) of the above named fund, do declare that what is stated in the above application is true to the best of our/my information and belief, and that the documents sent herewith are the originals or the true copies thereof.

(3) The application shall be accompanied by the following documents, namely:-
(a) the trust deed in original with one copy thereof, the latter, to be retained by the Commissioner; and
(b) the rules of the fund:

Provided that if the original of the trust deed cannot conveniently be produced, the Commissioner may accept, in lieu of the original, a true copy certified either by a Magistrate or in any manner specified in rule 7 of the Companies Rules, 1914 in which case, an additional copy shall be furnished for retention by the Commissioner.

(4) The application shall be submitted through the Deputy Commissioner of Income Tax of the area in which the accounts of the funds are kept, or, if the accounts are kept outside Pakistan, through the Deputy Commissioner of Income Tax of the area in which the local head quarters for the employer are situate.

70. Effective date for recognition.- An order according recognition to a provident fund shall take effect from the last day of the month in which the application for recognition is received by the Income Tax authority concerned unless, at the request of the employer, the last day of any later month in the same financial year is specified for such purpose.

71. Form of appeal in case of non-recognition or withdrawal of
recognition.- An appeal under sub-rule (1) of rule 12 of Part I of the Sixth Schedule to the Ordinance shall be in the following form and shall be verified in the manner indicated therein and accompanied by a copy of a challan for Rs. 100/- paid in Government treasury:-

FORM OF APPEAL IN CASE OF NON-RECOGNITION OR WITHDRAWAL OF RECOGNITION

To
The Central Board of Revenue,
Islamabad.

The petition of............employer(s) carrying on business, profession or vocation...........at............Your petitioner(s) applied to/obtained sanction from the Commissioner under Part I of the Sixth Schedule to the Income Tax Ordinance, 1979, for the recognition of the provident fund maintained by him (them) for the benefit of his (their) employees. The Commissioner has refused recognition/withdrawn recognition for the reason stated in his order, dated ........., of which a copy is attached.

For the reasons set out below your petitioner(s) submit (s) that the fund should be contained to be recognised and pray (s) that the Central Board of Revenue may be pleased to.

Record recognition
continue the recognition.

GROUNDS OF APPEAL

We/I........the petitioner(s) named in the above petition do declare that what is stated therein is true to the best of our/my information and belief.
Date_____________19 Signature ________________________
Name___________________________
Address__________________________

N.B. Unnecessary words or letters should be scored out.

72. Accounts required to be maintained.- (1) The accounts of a recognised provident fund shall be prepared at intervals of not more than twelve months.

(2) An account shall be maintained for each subscriber to the fund and it shall include the particulars shown in the following form:-

Account closed
Date
Paid to employee
Lapsed to the employer
or to fund
Recovery by employer

Name____________________ Date of joining Fund_______________

Month and Salary yeare

By employees

Contribution By Employer
Normal

Of containgent Nature

Total in Colums 3,4 and 5

Total interest on the amount shown in Column 6

1 2

3

4

5

6

7

 

Exempt

Not Exempt

    

Employer's contribution not exceeding statutory limit

Interest on sum in Column 6 at % but not exceeding statutory limit

Contribution Col. 4+5 minus Col. 8

Interest Col. 7 minus Col. 9

Additions to total income 10 Plus Col. 11

Remarks

8

9

10

11

12

13

Balance brought forward
July
August
June
Total

Adjustement on account of temporarywithdrawls account (Cloumns 8 and 9 only)
Adjustement on account of non-payable with drawls account Columns 10 and 11

Total carried over
If desired column 7 may be divided into sub-columns showing seperately the interest on columns 4 and 5 respectively.

Non-payable withdrawal Account

Temporary withdrawal Account
 

Amount

  

Advance Repayment
July

--

 Balance brought  
    Forward………………..…  
    July………………………..  
August

--

 August……………………..  
June

--

 June……………………….  
Total  

Total ___________________________________

(3) An abstract for the financial year or other applicable accounting period of the individual account of each employee participating in a recognised provident fund whose income under the head "Salary" is Rs. 12,000 or more per annum, shall be furnished by the trustees to the Deputy Commissioner of Income Tax of the area in which the employer conducts his business, profession or vocation, or to such other Deputy Commissioner of Income Tax as the Commissioner may, in each case, direct. Such abstract shall be furnished-

(a) in the case of a company, on or before the first day of August next following the financial year or within fifteen days of the expiry of six months from the end of the financial year, whichever is later; and

(b) in every other case-
(i) where the financial year ends at any time between the first day of the July and thirty-first day of December (both days inclusive), on or before the first day of August next following; and

(ii) in other cases on or before the first day of October next following.

It shall be in the form prescribed in sub-rule (2), but shall show only the total of the various columns thereof for the financial year or other accounting period.

It shall also give an account of any temporary withdrawals by the employees during the year and of the repayment thereof. Similar abstract shall also be furnished in respect of other employees participating in a recognised provident fund who were allowed withdrawals under rule 80 or who come within the purview of rule 75.

(4) The account to be made under the provisions of sub-rule (1) of rule 7 of Part I of the Sixth Schedule to the Ordinance shall show in respect of each employee, (i) the total salary paid to the employee during the period of his participation in the provident fund; (ii) the total contributions' (iii) the total interest which has accrued thereon; and (iv) so far as may be, the percentage of the employee's salary in accordance with which contributions have been made by the employer and the employee.

73. Time limit for Submission of accounts kept outside Pakistan.- Where the accounts of a recognised provident fund are kept outside Pakistan, certified copies of the accounts shall be supplied not later than the 15th September in each year to a local representative of the employer in Pakistan:

Provided that the Deputy Commissioner of Income Tax may, in any year, fix a date later than the 15th September as the date by which the certified copies shall be supplied.

74. Limit on contribution by employers.- The Commissioner may relax the limits fixed under clause (c) of sub-rule (1) of rule 2 of Part I of the Sixth Schedule to the Ordinance for contribution of an employer to the individual account of an employee in any year so however that such contribution shall not exceed the following limits, namely:-

(i) The employer's aggregate contribution in any year including the normal contribution to the individual account of any one employee, whose salary does not exceed five hundred rupees per mensem, shall not exceed double the amount of the contribution of the employee in that year; and

(ii) The amount of the periodical bonuses and other contributions of a contingent nature which may be credited by an employer in any year to the individual account of any one employee shall not exceed the amount of the contribution of the employee in that year.

75. Limit on contributions by certain employees.- Where an employee of a company owns shares in the company with a voting power exceeding ten per cent of the whole of such power, the sum of the exempted contributions of the employee and employer to the recognised provident fund maintained by the company shall not exceed Rs. 500 in any month.

76. Exclusion from total income of accumulated balances.- For the purpose of rule 4 of Part I of the Sixth Schedule to the Ordinance, the accumulated balance due and becoming payable to an employee participating in a recognised provident fund shall be exempt from income tax and shall be excluded from the computation of total income.

77. Treatment of considerations in lieu of assignment etc. of beneficial interest.- If an employee assigns or creates a charge upon his beneficial interest in a recognised provident fund, the Deputy Commissioner of Income Tax shall, on the fact of the assignment or charge coming to his knowledge, give notice to the employee that if he does not secure the cancellation of the assignment or charge within two months of the date of receipt of the notice, the consideration received for such assignment or charge shall be deemed to be income received by him in the year in which the fact became known to the Deputy Commissioner of Income Tax and shall be assessed accordingly.

78. Treatment in certain cases where recognition is withdrawn.- If the Commissioner withdraws recognition from a recognised provident fund, the balance to the credit of each employee at the end of the financial year prior to the date of the withdrawal of recognition shall be paid to him free of tax at the time when such employee receives the accumulated balance due to him. The remainder of the accumulated balance due to him shall be liable to tax as if the fund had never been recognised.

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