1. Non applicability.—

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 satisfied by recognized provident fund—

(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 (hereinafter referred to as “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 10% (ten precent) 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 fund;

(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 1 (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 500 (five hundred) Taka per menses; 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;

(i) The fund shall fulfil such other conditions as may be prescribed by the Board, through Government Gazette, by general or special order.

3. Method of recognition of Provident Funds.—

(1) In order to approve the Provident Fund, the employer shall apply to the commissioner in the prescribed manner under whom the tax is assessed as an assessee.

(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 receipt of the application and if such decision is not given, such fund shall be deemed to have been approved.

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

(a) conditions and qualifications of approval;

(b) the effective date of the approval;

(c) duration of grant of approval.

(6) The effective date of the approval shall not be later than the last date of the financial year in which the approval decision is issued.

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

4. Withdrawal of recognition of Provident Funds.—

(1) If the Commissioner is of the opinion that the conditions prescribed in paragraphs 3 and 4 of this Part have been violated or not complied with by the concerned Provident Fund, 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) In the case, where the approval is withdrawn under sub-paragraph (1), the Commissioner shall notify the same in writing to any trustee of the fund mentioning in the following—

(a) the reason for such withdrawal; and

(b) effective date of withdrawal.

(4) Where 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 paragraph 2 if approval is sought again:

   Provided that the Commissioner may, if he thinks fit, consider the continued recognition of the fund after the expiry of the period of the fund.

5. Treatment relating to income and contribution to the Fund.—

(1) Contributions made by an employer to any recognized Provident Fund shall, subject to the limits prescribed in this Act, be deducted from the income, profits and gains in the assessment of the assessee.

(2) Where any income is received from the Fund as interest or otherwise, except contribution, in such case-

(a) a sum not exceeding A shall be tax exempted, if A < (B X 33%);

(b) a sum equivalent to A – (B X 33%) shall be included in income of the person received the money, if A > (B X 33%), When-

A = amount of money received from the fund during the income year,

B = income from employment (excluding the said income) in the income year.

6. Tax on accumulated balance.—

(1) Where an employee participating in a recognized 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.

(2) Where exemption from payment of tax is not allowed if conditions under sub-paragraph (1) are not met , the Deputy Commissioner of Taxes shall determine 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 recognized 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.

(3) Any payment from the accumulated balance shall be taxable unless the payment is exempt from income-tax under sub-paragraph (1).

(4) In calculating amount tax deduction at source—

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

(b) average rates are to be followed;

(c) the provisions of this Act relating to deduction and repayment shall apply.

7. Accounts of recognized Provident Funds.—

(1) The accounts of a recognized 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.

8. Treatment of existing balance of recognized Provident Fund.—

(1) Where any Provident Fund is recognized with existing balance, the Trustees shall prepare or cause to be made an account of the fund in the following manner—

(a) account shall be made of the fund up to the day immediately preceding the day on which the recognition takes effect;

(b) the accounts shall show the following information—

i. the amount of each employee’s accumulated balance up to the said closing date, a breakdown of balance contribution and other than contribution;

ii. the amount of balance transferred to the account of the concerned employee in the recognized Provident Fund, hereinafter referred to as transferred balance;

iii. amount which is not transferred till the date in the account of the concerned employee in the recognized provident fund;

iv. the breakdown of the contribution portion and the other than contribution portion up to the said last day into transferred balance and non-transferred balance;

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

(2) From the date on which recognition takes effect, the transferred balance in favour of the concerned employee in the recognized Provident Fund shall be shown as deposited balance.

(3) Any portion of the balance of deposits in favour of an employee in an existing fund which is not transferred to the Recognized Provident Fund shall be excluded from the accounts of the Recognized Provident Fund, and shall be taxable thereon in accordance with the provisions of this Act, and the provisions of this Part shall not apply to such balance.

(4) In cases where the transferred balance consists of both contributory portion and 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 Recognized Provident Fund for the purpose of enabling him to pay the tax assessed under sub-paragraph (4).

(6) Nothing in this Article shall prejudice the rights of any person or any employee operating or dealing with such Provident Fund, who has not been recognized prior to recognition.

9. Treatment of fund transferred by employer to trustee.—

(1) Where an employer who maintains a Provident Fund (whether recognized or not) for the benefit of his employees and has not transferred the fund or any portion thereof, 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 49(v), incurred in the income year in which the accumulated balance due to the employee is paid.

10. Provisions of this part to prevail against regulations of the fund.—

Where there is a repugnance between any regulation of a Recognized 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.

11. Appeals.—

(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 60 (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.

12. Explanation.—

For the purpose 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) “Non-contribution portion” means the amount accruing to the Provident Fund excluding the contribution made by the employee and the employer;

(f) “employee” means an employee participating in a Provident Fund but does not include a personal or domestic servant;

(g) “employer” means—

(i) a company, local authority, firm, other association of persons, a Hindu undivided family or a natural person engaged in a business or profession the profits and gains whereof is assessable to tax under the head “Income from business”, maintaining a Provident Fund for the benefit of his or its employees; or

(ii) any diplomatic, consular or trade mission or office of any inter-governmental organization located in Bangladesh, maintaining a Provident Fund for the benefit of Bangladeshi employees of such mission or office.

(h) “Recognized Provident Fund” means a Provident Fund which has been and continues to be recognized by the Commissioner, in accordance with the provisions of this Part;

(I) “regulations of a fund” means the special body of regulations governing the constitution and administration of a particular provident fund; and

(J) “salary” includes dearness allowance if the terms of employment so provide, but excludes all other allowances and perquisites.