Income Tax Ordinance


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[See section 2(5A)]

1. Definitions.--

In this Part, unless the context otherwise requires, the expression "contribution", "employee", "employer", "regulations of a fund" and "salary" have, in relation to gratuity funds, the meaning assigned to those expressions in paragraph 1 of Part B in relation to provident funds.

2. Approval of gratuity funds.-

2[(1)     The Board shall, within 3[three months] from the date of receipt of the application by it for according approval to any gratuity fund, accord such approval, failing which the gratuity fund shall be deemed to have been 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 or withdrawing approval shall take effect from such date as the Board may communicate in writing to trustees of the fund.

(3)       The Board shall neither refuse nor withdraw approval to any gratuity fund unless it has given the trustees of that fund a reasonable opportunity of being heard.

3. Conditions for approval.--

In order that a gratuity fund may receive and retain approval, it shall satisfy the conditions hereinafter specified and any other conditions which the Board may prescribe-

(a)   the fund shall be a fund established under an irrevocable trust in connection with trade or undertaking carried on in Bangladesh and not less than ninety per cent. of the employees of such trade or undertaking shall be employed in Bangladesh;

1 PART C ins  by  F . A . 1993

2  subs . by F. A . 1999

3  subs  . for “ six  months “ by  F . A . 2006   again  subs .; for   “ three months “ by F . A . 2009

b)   the fund shall have for its sole purpose the provision of a gratuity to employees in the trade or undertaking on their retirement or after a specified age or on their becoming incapacitated prior to such retirement, or on termination of their employment after a minimum period of service specified in the regulations of the fund or to the widows, children or dependents 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 Bangladesh.

4. Application for approval.-

(1)       An application for approval of gratuity fund shall be made in writing by the  of the fund to the1 [Board ]and shall be accompanied by a copy of the instrument under which the fund is established and by two copies of the rules 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. The Board may require such further information to be supplied as it thinks proper.

(2)       If any alteration in the regulations, 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 alteration to the Deputy Commissioner of Taxes mentioned in sub-paragraph (1), and in default of such communication, any approval given shall, unless the Board otherwise orders, be deemed to have been withdrawn from the date on which the alteration took effect.

5. Exemption of income of gratuity fund from tax.--

Income derived from investments or deposits of an approved gratuity fund and any capital gains arising from the transfer of capital assets of such fund shall be exempt from payment of tax.

6. Treatment of contribution by employer.--

Any sum paid by an employer as contribution towards an approved gratuity fund shall be deducted in computing his income, profits and gains for the purposes of assessment.

 1   subs . for “D eputy  commissioner  of  taxes  by whom  the  employer is  assable”  by F . A . 2000



7. Contributions by employer, when deemed to be his income.--

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 tax to be the income of the employer for the income year in which they are so repaid.

8. Particulars to be furnished in respect of gratuity funds.--

The trustees of an approved gratuity fund and any employer who contributes to an approved gratuity fund shall, when required by notice from the Deputy Commissioner of taxes, furnish, within such period as may be specified in the notice, such return, statement, particulars or information as the Deputy Commissioner of Taxes may require.

9. Provisions of this Part to prevail against regulations of the fund.--

Where there is a repugnance between any regulation of an approved gratuity fund and any provision of this Part or of the rules made there under , the said regulation shall, to the extent of repugnance, be of no effect, and the Board may, at any time, require that such repugnance shall be removed from the regulations of the fund.

10. Provisions relating to rules.--

In addition to any power conferred in this Part, the Board may make rules-

(a)       prescribing the statements and other information to be submitted along with an application for approval;

(b)       limiting the ordinary, annual, and other contributions of an employer to the fund;

(c)        regulating the investment or deposit of the money of an approved gratuity fund;

(d)       providing for 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 further control over the approval of gratuity funds and the administration of gratuity funds, as it may deem requisite.