1. Inapplicability.-

The provisions of this Part shall not apply to any provident fund to which the Provident Fund Act, 1925 (Act No. 19 of 1925) applies.

2. Conditions to be fulfilled in respect of recognized Provident Funds.-

The following conditions shall be fulfilled in order to obtain and maintain recognition by a Provident Fund-

(a) All employees shall be employed within Bangladesh or the principal place of business of the employer of the employed employees shall be situated in Bangladesh; 

Provided that, notwithstanding that not more than 10% (ten percent) of the employed employees are employed outside Bangladesh, if the Commissioner of Taxes (hereinafter referred to in this Part as “the Commissioner”) considers it conditional, subject to the said condition, the head office of an establishment carried on by an employer can recognize funds managed by him despite being outside Bangladesh;

(b) The amount of annual contribution of an employee in any year shall be deducted from his annual salary at the specified rate, and the employer shall deduct the contribution from the salary of the employee in each periodical installment at the rate at which the contribution was payable in that year and the amount shall be credited, deposit must be made to the employee’s personal account in the fund.

(c) The amount of contribution payable by the employer to the personal account of the employee for any year shall not exceed the amount of contribution payable by the employee for that year, and the amount shall be credited by the employer to the personal account of the employee at an interval of not more than 1 (one) year: 

Provided that the Commissioner may, subject to rules made by the Board for the purpose, relax the provisions of this clause in respect of any special fund in the following cases-

(i) allowing the employer to deposit excess contributions into the personal account of each such employee whose monthly salary does not exceed 500 (five hundred) taka; and

(ii) authorizing the payment of temporary or periodical bonus or contribution of a contingent nature by the employer to the personal account of the employee, in which case such bonus and other contributions are calculated and paid in accordance with the rules specified in the regulations of the fund;

(d) The Fund shall be constituted by the aforesaid subscriptions and donations received by the Trustee, if any, interest on its accumulated money, money deposited and securities purchased with such money and capital gains arising from the sale, exchange or transfer of the capital assets of the Fund, and the fund shall not be constituted by any money other than;

(e) the fund shall be vested in two or more trustees or official the consent of all the beneficiaries of the said trust;

(f) Where an employee is dismissed for misconduct other than due to ill-health or any other unavoidable reason, or voluntarily leaves employment before the period of service prescribed by the fund regulations, the employer shall not be entitled to recover any money from the employee in respect of the fund:

Provided that, in such case, his powers shall be limited until the employer recovers from the fund any amount in respect of contributions paid by the employer to the employee’s personal account and interest accrued on the sums accrued, including paid contributions, in accordance with the regulations of the fund;

(g) an employee shall repay his accumulated balance in the fund on the day on which he ceases to operate the fund under the employer;

(h) shall not pay to any employee any part of the status credited in his favour, except subject to the provisions of clause (g) or the conditions and restrictions prescribed by the Board; fulfill such other conditions as may be prescribed by the Fund Board, through the Government Gazette, by general or special order.

3. Procedure for approval.—

(1) In order to approve the provident fund, the employer shall apply to the Commissioner under whom his tax is determined as a taxpayer in the prescribed manner.

(2) The Commissioner shall consider the application, related records and documents in his possession and may request other documents from the Trustee in writing for consideration.

(3) While considering the application, the Commissioner may, if necessary, direct the applicant to appear before him.

(4) The commissioner shall, by written order, give his decision on the application within 60 (sixty) days from the date of receipts of the application and if such decision is not made, such fund shall deemed have been approved. 

(5) If approval is granted, the order shall include the following:

(a) terms and conditions of approval;

(b) the effective date of the approval;

(c) Duration of approval.

(6) In the fiscal year in which decision of approval is to be given, the date of approval shall not be later than the last date of that fiscal year.

(7) If approval is granted for a fixed period, the employer shall apply for extension of the period before the expiry of the said period.

4. Withdrawal of approval.—

(1) If the Commissioner is of the opinion that the Provident Fund concerned under paragraphs 3 and 4 of this Part If the said conditions are violated or not complied with, the Commissioner may withdraw the said approval at any time.

(2) The Commissioner shall not withdraw the approval without giving the applicant a reasonable opportunity of being heard.

(3) Where the approval under sub-section (1) is withdrawn, the Commissioner shall notify the same in writing to any trustee of the fund specifying the following matters-

(a) the reason for such withdrawal; and

(b) Effective date of withdrawal.

(4) Where an approval is granted for a specified period, it shall automatically terminate on the expiry of that period, and fresh application shall be made by the trustee under section 2 if re-approval is sought:

Provided that the Commissioner may, if he thinks fit, consider the recognition of the Fund to continue even after the expiry of the period of the Fund.

5. Provisions relating to income and contributions to funds.—

(1) Contributions made by an employer to any recognized provident fund shall, subject to the limits specified in this Act, be deducted from the income, profits and gains computed by the assessee of his tax.

(2) Where any income is received from the fund by interest or otherwise, other than as part of the subscription-

(a) a sum of money shall be exempted from payment of tax, if a < (b × 33%);

(b) An amount equal to (b x 33%) shall be added to the income of the recipient, if a > (b × 33%), When-

a = amount of money derived from the fund in the income year,

b = Salary income (excluding said income) in the income year.

6. Tax on accumulated amount.—

(1) Where an employee continues to serve under his employer for a period of at least 5 (five) consecutive years, and accumulated amount is payable in favor of such employee, such accumulated balance shall, subject to the provisions of this Act, be exempted from payment of tax and shall be exempted and such accumulated balance be excluded from his gross income: 

Provided that if, in the opinion of the Commissioner, the termination of the employment of the said employee is due to i bealth of the employee or as a result of contraction or closure of the business of the employer or as a result of any cause beyond the control of the employee, he has served less than 5 (five years under the employer concermed, in that case, the Commissioner can grant tax exemption on the said accumulation.

(2) Where the accumulated balance is paid in favor of an employee but no tax exemption is granted because the conditions of sub-section (1) are not met, the Deputy Commissioner of Taxes shall determine the amount of gross income payable to the employee for each relevant tax year and so the difference between the prescribed tax and the tax paid by the employee in those years shall be paid by the employee in the income year in which the accumulated balance is payable to the employee.

(3) Any payment from the accumulated amount shall be tax deductible unless the payment is exempted from income-tax under sub-section (1).

(4) In calculating amount deducted at source-

(a) payment from accumulated balance shall be treated as salary;

(b) the average rate shall be followed;

(c) The provisions of this Act relating to deductions and repayments shall apply.

7. Accounts of recognized provident funds.—

(1) The accounts of any recognized provident fund shall be maintained by its trustees and shall be maintained in such form and for such period and with such particulars as may be prescribed by the Board.

(2) The accounts shall be kept open for inspection by the Income-tax authorities at any convenient time and a summary of the accounts shall be filed by the trustees with the Deputy Commissioner of Taxes as directed by the Board.

8. Recognition of provident fund with existing balance.—

(1) Where a provident fund is recognized with existing balance, the trustees shall prepare or cause to be made an account of the fund in the manner described below-

(a) the statement of accounts shall be prepared by the last day of the pre-acceptance period;

(b) The statement of accounts shall show the following particulars-

(i) the balance amount of each employee’s accrued share up to the said last day, a breakup of the contribution share in balance and the non-contribution share;

(ii) the amount of deposit balance transferred to the account of the employee concerned in the recognized provident fund, hereinafter referred to as transferred balance;

(iii) the amount of untransferred balance till date in the account of the employees concerned in the recognized provident fund.

(iv) the division of the subscribed portion and the unsubscribed portion up to the said last day into transferred balance and untransferred balance;

(v) such other details as may be prescribed by the Board.

(2) From the date on which the recognition shall be effective, the balance transferred in favor of the concerned employee in the said recognized provident fund shall be shown as the balance of deposit.

(3) That part of the balance of deposits in favor of an employee in an existing fund which is not transferred to a recognized provident fund shall be excluded from the accounts of the recognized provident fund, and shall be taxed thereon in accordance with the provisions of this Act, and the provisions of this Part shall apply to such balance.

(4) Where the transferred status consists of both a contributory portion and a non-contributory portion, 50% (fifty percent) of the non-contributory portion of the fund shall be treated as income received by the employee in the income year of recognition.

(5) An employee shall be entitled to withdraw money from the balance in his favor in the recognized provident fund for the purpose of enabling him to pay the tax assessed under sub-section (4).

(6) Nothing in this section shall prejudice the rights of any person managing or dealing with such provident fund or any employee submitting balance not previously recognized.

9. Provisions relating to funds transferred by employer to trustee.

(1) Where an employer operates any provident fund, whether recognized or unrecognized, for the welfare of employees and such fund or part thereof is not transferred, such fund or part thereof in which the employees participate transferred to the trustees of the trust, the said transfer will be treated as expenditure of capital nature.

(2) Where an employee participating in the fund is paid an amount of accumulated balance, if any portion of the amount representing that balance paid by the employer is transferred to the trustee (without adding interest and excluding the employee’s contribution and interest on such deposit), the employer shall pay the employee before payment of the due portion, the tax payable on the relevant portion is deducted at source, in the income year in which the accumulated balance was paid in favor of the employee, the same shall be allowed as expenditure as per clause (f) of section 49.

10. Precedence of Provisions of this Part over Regulations of Fund.— 

Where there is any inconsistency with any of the provisions of this Part or any rules made thereunder with any regulations of recognized Provident Funds, the inconsistent part of the regulations of the Fund shall be deemed to be inoperative; and the Commissioner may at any time direct the removal of any inconsistent part of the regulations of the Fund.

11. Appeal.—

(1) The employer may appeal to the Board within 60 (sixty) days of the issuance of such order against the order passed by the Commissioner regarding refusal of recognition or withdrawal of recognition in respect of any provident fund.

(2) The appeal must be filed in the prescribed form and in the prescribed manner.

(12) Explanation.-For the purposes of this section-

(a) “paid accumulated balance” means the accumulated balance claimed by an employee under the regulations of that fund in a fund maintained by an employer, or part thereof, from the date on which he ceases to be an employee of the employer;

(b) “Annual Increase” means the amount of an employee’s accumulated balance increased by contributions and interest for one year;

(c) “deposit balance” means the total amount deposited by an employee in his personal account in the Provident Fund at any time;

(d) “contribution” means money deposited by or in favor of an employee out of his salary or by the employer from his own money into the employee’s personal account, but does not include any money so deposited as interest;

(e) “contribution share” means the sum of contributions made by the employee and the employer to the Provident Fund;

(f) “non-contributory portion” means the amount accumulating to the Provident Fund without the contribution made by the employee and the employer;

(g) “employee” means any employee who participates in the Provident Fund, but does not include a personal employee or domestic servant;

(h) “Employer” means-

(a) the management of provident funds for the welfare of any company, firm, other body of persons, any Hindu undivided family or any natural person engaged in such business or profession the profits or gains of which are taxed under the head ‘income from business’; by; or

(b) any diplomatic, consular or trade mission within Bangladesh or any office of an international organization which is located in Bangladesh and operates a Provident Fund for the welfare of its employees;

(i) “recognised provident fund” means any such provident fund recognized process of recognition by the Commissioner under the provisions of this Part;

(j) “Fund Regulations” means a set of special rules made for the constitution and management of a specified Provident Fund; and

(k) “pay” shall include dearness allowance, if the conditions of employment so provide, but shall exclude any other allowance or perquisite.