THE FIRST SCHEDULE
RECOGNISED PROVIDENT FUNDS
[See section 2(52)]
For the purposes of this Part,-
(a) "accumulated balance due" to an employee means the balance to his credit, or such portion thereof as may be claimable by him under the regulations of the fund, on the day he ceases to be an employee of the employer maintaining the fund;
(b) "annual accretion" to the balance to the credit of an employee means the increase to such balance in any year, arising from contributions and interest;
(c) "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;
(d) "contribution" means any sum credited by or on behalf of any employee out of his salary, or by an employer out of his own money to the individual account of an employee, but does not include any sum credited as interest;
(e) "employee" means an employee participating in a provident fund but does not include a personal or domestic servant;
(f) "employer" means-
1[(i) a company, firm, other association of persons, a Hindu undivided family or an individual engaged in a business or profession the profits and gains whereof is assessable to tax under the head "Income from business or profession", maintaining a provident fund for the benefit of his or its employees]; or
2[(ii) any diplomatic, consular or trade mission or office of any intergovernmental organization located in Bangladesh, maintaining a provident fund for the benefit of Bangladeshi employees of such mission or office;]
(g) "recognized provident fund" means a provident fund which has been and continues to be recognised by the Commissioner, in accordance with the provisions of this part;
(h) "regulations of a fund" means the special body of regulations governing the constitution and administration of a particular provident fund; and
(i) "salary" includes dearness allowance if the terms of employment so provides, but excludes all other allowance and perquisites.
2. According and withdrawal of recognition of provident funds.-
3[(1) The Commissioner shall, within 4[forty five days] from the date of receipt of the application by him for according recognition to any provident fund, accord such recognition, failing which the provident fund shall be deemed to have been accorded recognition, and the Commissioner may, if, in his opinion, the provident fund contravenes any of the conditions specified in paragraph 3 and the rules made by the Board in that behalf, withdraw such recognition at any time.]
(2) An order according recognition shall take effect on such date as the Commissioner may fix in accordance with any rules the Board may make in this behalf, such date not being later than the last day of the financial year in which the order is made.
(3) An order according recognition to a provident fund shall not, unless the Commissioner otherwise directs, be affected by the fact that the fund is subsequently amalgamated with another provident fund on the occurrence of an amalgamation of the undertaking in connections 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.
(4) An order withdrawing recognition shall take effect from the day on which it is made.
(5) The Commissioner shall neither refuse nor withdraw recognition of any provident fund, unless the applicant is given a reasonable opportunity of being heard.
3. Conditions to be satisfied by a recognised provident fund.-
In order that a provident fund may receive and retain recognition, it shall satisfy the conditions set out below and any other conditions which the Board may prescribe-
(a) all employees shall be employed in Bangladesh or shall be employed by an employer whose principal place of business is in Bangladesh:
Provided that the Commissioner may, if he thinks fit and subject to such conditions, if any, as he thinks proper to attach to the recognition, accord recognition to a fund maintained by an employer whose principal place of business is not in Bangladesh notwithstanding that a proportion not exceeding ten per cent of the employees is employed outside Bangladesh;
(b) the contributions of an employee in any year shall be a definite proportion of his salary for that year, and shall be deducted by the employer from the employee's salary in that proportion at each periodical payments of such salary in that year and credited to the employee's individual account in the
(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:
Provided that, subject to any rules which the Board may make in this behalf, the Commissioner may, in respect of any particular fund, relax the provisions of this clause-
(i) so as to permit the payment of larger contributions by an employer to the individual accounts of employees whose salaries do not, in each case, exceed five hundred taka per mensem; and
(ii) so as to permit the crediting by employers to the individual accounts of employees of periodical bonuses or other contributions of a contingent nature, where the calculation and payment of such bonuses or other contributions is provided for on definite principles by the regulations of the fund;
(d) the fund shall consist of contributions as above specified and of donations, if any, received by the trustees, of accumulations thereof, and of interest, credited in respect of such contributions, donations and accumulations, and of securities purchased therewith and of any capital gains arising from the sale, exchange or transfer of capital assets of the fund, and of no other sums;
(e) 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;
(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 account of ill health or other unavoidable cause before the expiration of the term of service specified in this behalf in the regulations of the fund:
Provided that in such cases the recoveries made by the employer shall be limited to the contributions made by him to the individual account of the employee, and to interest credited in respect of such contributions and accumulations thereof, in accordance with the regulations of the fund;
(g) the accumulated balance due to an employee shall be payable 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 prescribe, no portion of the balance to the credit of an employee shall be payable to him.
4. Annual accretion deemed to be income received by the employee.-
The annual accretion in any year to the balance at the credit of an employee participating in a recognised provident fund shall be deemed to have been received by him in that year and shall be included in his total income for that year, and, subject to the exemptions specified in paragraph 5 shall be liable to tax5[.
Provided that, for the purposes of section 44(3), out of such annual accretion only the employee's own contributions shall be included in his total income.]
5. Exemption of annual accretion from tax.-
(1) An employee shall not be liable to pay tax on contribution to his individual account in a recognised provident fund, in so far as the aggregate of such contributions in any year does not exceed one-third of his salary for that year.
(2) Interest credited on the accumulated balance of any employee in a recognised provident fund shall be exempt from payment of tax, if and in so far as it does not exceed one-third of the salary of the employee for the year concerned and in so far as it allowed at a rate not exceeding such rate as the Board may, by notification in the official Gazette, fix in this behalf.
6. Exemption of accumulated balance from tax.-
Where an employee participating in a recognised provident fund has rendered continuous service with his employer for a period of not less than five years, and the accumulated balance due to him becomes payable, such accumulated balance shall be exempt from payment of tax and shall be excluded from the computation of his total income:
Provided that the Commissioner may allow such exemption and exclusion where the employee has rendered continuous service with the employer for a period of less than five years, if in his opinion, the service has been terminated by reason of the employee's ill health, or by the contraction or discontinuance of the employer's business, or other cause beyond the control of the employee.
7. Tax on accumulated balance.-
Where exemption from payment of tax is not allowed under paragraph 6, the Deputy Commissioner of Taxes shall calculate the total of the various sums of tax which would have been payable by the employee in respect of his total income for each of the years concerned if the fund had not been a recognised provident fund, and the amount by which such total exceeds the total of all sums paid by or on behalf of such employee by way of tax for such years shall be payable by the employee in addition to any tax for which he may be liable for the income year in which the accumulated balance due to him becomes payable.
8. Deduction at source of tax on accumulated balance due.-
The trustees of a recognised provident fund, or any other person authorised by the regulations of the fund to make payment of accumulated balance due to employees shall, at the time an accumulated balance due to an employee is paid, deduct therefrom any tax payable under paragraph 7 and any tax payable under paragraph 10(4), and the provisions of Chapter VII shall, so far as may be, apply as if accumulated balance was income chargeable under the head "Salaries".
9. Accounts of recognised provident funds.-
(1) The accounts of a recognised provident fund shall be maintained by the trustees of the fund and shall be in such form and for such periods and shall contain such particulars as the Board may prescribe.
(2) The accounts shall be open to inspection at all reasonable times by the income tax authorities, and the trustees shall furnish to the Deputy Commissioner of Taxes such abstracts thereof as the Board may prescribe.
10. Treatment of balance in newly recognised provident funds.-
(1) Where recognition is accorded to a provident fund with existing balance, 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 Board may prescribe.
(2) The account shall also show in respect of the balance to the credit of each employee the amount thereof which is to be transferred to that employee's account in the recognised provident fund, and such amount (hereinafter called his transferred balance) shall be shown as the balance to his credit in the recognised provident fund on the date on which the recognition of the fund takes effect, and sub-paragraph (4) and (5) shall apply thereto.
(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 tax in accordance with the provisions of this Ordinance other than this Part.
(4) Subject to such rules as the Board may make in this behalf, the Deputy Commissioner of Taxes shall make a calculation of the aggregate of all sums comprised in a transferred balance which would have been liable to tax if this part had been in force, from the date of institution of the fund, without regard to any tax which may have been paid on any such sum, and such aggregate, if any, shall be deemed to be income received by the employee in the income year in which the recognition of the fund takes effect, and shall be included in the employee's total income for that income year, and for the purposes of assessment, the remainder of the transferred balance shall be disregarded, but
no 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 Commissioner shall have power, subject to the said rules, to make a summary calculation of such aggregate.
(5) Notwithstanding anything contained in paragraph 3(h), an employee in order to enable him to pay the amount of tax assessed on his total income as determined under sub-paragraph (4), 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 had not been included in his total income.
(6) Nothing in this paragraph shall affect the rights of the persons administering an unrecognised provident fund or dealing with it, or with the balance to the credit of any individual employee, before recognition is accorded, in any manner which may be lawful.
11. Treatment of fund transferred by employer to trustee.-
(1) Where an employer who maintains a provident fund (whether recognised or not) for the benefit of his employees and has not transferred the fund or any portion of it, transfers such fund or portion to trustees in trust for the employees participating in the fund, the amount so transferred shall be deemed to be of the nature of capital expenditure.
(2) When an employee participating in such fund is paid the accumulated balance due to him therefrom, any portion of such balance as represents his share in the amount so transferred to the trustee (without addition of interest, and exclusive of the employee's contributions and interest thereon) shall, if the employer has made effective arrangement 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 29(1) (xxvii), incurred in the income year in which the accumulated balance due to the employee is paid.
12. Provisions of this Part to prevail against regulations of the fund.-
Where there is a repugnance between any regulation of a recognised provident fund and any provisions of this Part or of the rules made thereunder, the regulation shall, to the extent of the repugnance, be of no effect; and the Commissioner may at any time, require that such repugnance shall be removed from the regulations of the fund.
(1) An employer objecting to an order of the Commissioner refusing to recognise or an order withdrawing recognition from a provident
fund may prefer an appeal, within sixty days of the date of such order, to the Board.
(2) The appeal shall be in such from and shall be verified in such manner as may be prescribed.
14. Provisions relating to rules.-
In addition to any power conferred by this Part, the Board may make rules-
(a) prescribing the statements and other information to be submitted with an application for recognition;
(b) limiting the contributions to a recognised provident fund by employees of a company who are shareholders in the company;
(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 exemption from payment of tax may be granted in respect of contributions and interest credited to the individual accounts of employees in a provident fund from which recognition has been withdrawn;
(e) regulating the investment or deposit of the moneys of a recognised provident fund ; and
(f) generally, to carry out the purposes of this Part, and to secure such further control over the recognition of provident funds, and the administration of recognised provident fund, as it may deem requisite.
15. Application of this Part.-
This Part shall not apply to any provident fund to which the Provident Fund Act, 1925 (XIX of 1925), applies.
1Subs. by F.A. 1997
2Ins. by F.A. 1987, re-numbered as sub-clause (ii) by F.A. 1996
3Subs. by F.A. 1995
4Subs. for "six moths" by F.A. 2002 again subs. for "thirty days" by F.O. 2008
5Subs. by F.A. 2017 ane ometted by 2017