Income Tax Act

Official PDF pages 666–670

SOURCE PDF PAGE 666
conditions prescribed in paragraph 3, and may withdraw such approval at any time,
if, in his opinion, the circumstances cease to warrant such approval.
(2) The approving authority shall inform the trustees of the fund, in writing, the grant
of approval with the date on which the approval is to take effect and the conditions
subject to which such approval is granted, if any.
(3) The approving authority shall inform the trustees of the fund, in writing, any
withdrawal of approval along with the reasons and the date on which the withdrawal
is to take effect.
(4) The approving authority shall not refuse or withdraw any approval without
giving the trustees a reasonable opportunity of being heard.
Conditions for approval.
3.   In order to receive and retain approval, a superannuation fund or a gratuity fund,
as the case may be, shall satisfy the following conditions, and any other conditions
as may be prescribed:—
( a )   the fund shall be established under an irrevocable trust in connection
with a trade or an undertaking carried on in India, with at least 90%
employees employed in India;
( b )   the sole purpose of the fund shall be the provision of annuities or gratuity,
as the case may be, for employees in the trade or undertaking––
( i )   upon their retirement at or after a specified age;
( ii )   upon incapacitation before retirement;
( iii )   on termination of employment after a minimum period of service
specified in the rules of the gratuity fund; or
( iv )   for the widows, children or dependants of such employees on their
death;
( c )   the employer in the trade or undertaking shall contribute to the fund;
and
( d )   all annuities, pensions and other benefits, granted from the fund shall
be payable only in India.
Application for approval.
4.   (1) An application for approval of a superannuation fund or part of it, or any
gratuity fund, as the case may be, shall be made in writing by the trustees to the
Assessing Officer by whom the employer is assessable, and shall be accompanied by—
( a )   a copy of the instrument establishing the fund and two copies of the rules
thereof; and
( b )   two copies of the accounts of the fund relating to such earlier year or
years (not more than three years immediately preceding the year in which
the said application is made) for which the accounts have been made
up, if the fund has been in existence before the financial year in which
the application for approval is made.
(2) In addition to the documents referred to in sub-paragraph (1), the approving
authority may require such further information to be furnished as he thinks proper.

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(3) If any alteration is made to the rules, constitution, objects or conditions of the
fund after the date of the application for approval,––
( a )   the trustees shall immediately inform such alterations to the Assessing
Officer mentioned in sub-paragraph (1); and
( b )   failure to inform such alterations may result in the approval given, if
any, be deemed to be withdrawn from the date on which the alteration
took effect, unless the approving authority orders otherwise.
Gratuity deemed to be salary.
5.   If any gratuity is paid to an employee during his lifetime, the gratuity shall be
treated as salary paid to the employee for the purposes of this Act.
Contributions of employee when deemed to be income of employer.
6.   When contributions by an employer (including the interest, if any) are repaid to
the employer, the amount so repaid shall be deemed for the purposes of income-tax
to be the income of the employer of the tax year in which they are so repaid.
Deduction of tax on contributions paid to an employee.
7 . (1) When any contributions made by an employer to an approved superannuation
fund, including interest are paid to an employee during his lifetime under conditions
other than those specified in Schedule II (Table: Sl. No. 8), tax on the amounts so
paid shall be deducted at the average rate of tax applicable to the employee—
( a )   during the previous three years; or
( b )   during the period for which the employee was a member of the fund, if
the period is less than three years.
(2) The trustees shall pay the tax so deducted to the Central Government within the
time and manner, as may be prescribed.
Deduction from pay of and contributions on behalf of employee to be included
in return.
8.   When an employer deducts contributions from the emoluments of the employee
or pays on his behalf any contributions to an approved superannuation fund, all
such deductions or payments shall be included in the statement which is required
under section 397(3)( b ).
Appeal.
9.   (1) An employer objecting to an order of the approving authority refusing to
grant approval to a superannuation fund, or a gratuity fund, as the case may be, or
withdrawing such approval may appeal to the Board within sixty days of such order.
(2) The appeal shall be in such form and verified in such manner and subject to the
payment of such fee, as may be prescribed.
Liability of trustees on cessation of approval of superannuation fund.
10.   If a fund or a part of a fund for any reason ceases to be an approved superan -
nuation fund, the trustees of the fund shall nevertheless remain liable to tax on any
sum paid on account of returned contributions (including interest on contributions,
if any), in so far as the sum so paid is in respect of contributions made before the
fund or part of the fund ceased to be an approved superannuation fund under the
provisions of this Part.

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Liabilities of trustees on cessation of approval of gratuity fund.
11.   If a gratuity fund for any reason ceases to be an approved gratuity fund, the
trustees shall nevertheless remain liable to tax on any gratuity paid to any employee.
Particulars to be furnished.
12.   The trustees of an approved superannuation fund or an approved gratuity fund
and any employer who contributes to such a fund shall furnish such returns, state -
ment, particulars or information, as required by notice from the Assessing Officer
within the specified period, not being less than twenty-one days from the date of
the notice.
PART C
POWER TO MAKE RULES FOR PROVIDENT FUNDS,
SUPERANNUATION FUNDS AND GRATUITY FUNDS
Power of Board to make rules for fund.
1.   In addition to powers granted by Part A and Part B of this Schedule, the Board
may make rules for a fund (provident fund or superannuation fund or gratuity fund)
in respect of the following:—
( a )   to provide for the statements and information to be submitted along with
an application for approval or recognition for a fund;
( b )   to provide for the returns, statements, particulars, or information which
the Assessing Officer may require from the trustees of an approved
superannuation fund or from the employer;
( c )   to limit the ordinary annual and other contributions of an employer to
the gratuity fund or an approved superannuation fund;
( d )  
48
[ *** ]
49
[ ( e )   to regulate investment or deposit of the moneys of a recognised or an
approved fund; ]
( f )   to provide 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 or an approved fund;
( g )   to determine the extent and manner of exemption from payment of tax
on contributions and interest credited to the individual account of the
employee in a provident fund from which recognition has been withdrawn;
48.   Omitted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its omission, clause ( d ) read as
under :
“( d )   to limit the contributions to a recognised provident fund by employees who are
shareholders in the company;”
49.   Substituted,   ibid.   Prior to its substitution, clause ( e ) read as under :
“( e )   to regulate investment or deposit of the moneys of a recognised or an approved fund,
subject to the condition that no rule shall require more than 50% of the fund’s money
to be invested in Government securities as defined in section 2( f ) of the Government
Securities Act, 2006 (38 of 2006);”

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( h )   to determine the extent and manner of exemption from payment of tax
on any payment made from a superannuation fund from which approval
has been withdrawn;
( i )   to provide for the withdrawal of the approval of a superannuation fund
or gratuity fund, which ceases to satisfy the requirements of this Part or
the rules made thereunder; and
( j )   to carry out any other the purpose of this Part and to secure such further
control over the recognition or approval of the funds and the adminis -
tration of such funds as it may deem requisite.
2.   All rules made under this Part shall be subject to section 534.
SCHEDULE XII
[ See   section 51]
PART A
MINERALS
1.   Aluminium ores.
2.   Apatite and phosphatic ores.
3.   Beryl.
4.   Chrome ore.
5.   Coal and lignite.
6.   Columbite, Samarskite and other minerals of the “rare earths” group.
7.   Copper.
8.   Gold.
9.   Gypsum.
10.   Iron ore.
11.   Lead.
12.   Manganese ore.
13.   Molybdenum.
14.   Nickel ores.
15.   Platinum and other precious metals and their ores.
16.   Pitchblende and other uranium ores.
17.   Precious stones.
18.   Rutile.
19.   Silver.
20.   Sulphur and its ores.
21.   Tin.
22.   Tungsten ores.

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23.   Uraniferous allanite, monazite and other thorium minerals.
24.   Uranium bearing tailings left over from ores after extraction of copper
and gold, ilmenite and other titanium ores.
25.   Vanadium ores.
26.   Zinc.
27.   Zircon.
50
[ 28.   Beryllium bearing minerals.
29.   Glauconite.
30.   Graphite.
31.   Indium bearing minerals.
32.   Lithium bearing minerals.
33.   Niobium bearing minerals.
34.   Potash.
35.   Rhenium bearing minerals.
36.   Tantalum bearing minerals. ]
PART B
GROUPS OF ASSOCIATED MINERALS
1.   Apatite, Beryl, Cassiterite, Columbite, Emerald, Felspar, Lepidolite, Mica,
Pitchblende, Quartz, Samarskite, Scheelite, Topaz, Tantalite, Tourmaline.
2.   Iron, Manganese, Titanium, Vanadium and Nickel minerals.
3.   Lead, Zinc, Copper, Cadmium, Arsenic, Antimony, Bismuth, Cobalt, Nickel,
Molybdenum, and Uranium minerals, and Gold and Silver, Arsenopyrite,
Chalcopyrite, Pyrite, Pyrrhotite and Pentlandite.
4.   Chromium, Osmiridium, Platinum and Nickel minerals.
5.   Kyanite, Sillimanite, Corundum, Dumortierite and Topaz.
6.   Gold, Silver, Tellurium, Selenium and Pyrite.
7.   Barytes, Fluorite, Chalcocite, Selenium, and minerals of Zinc, Lead and
Silver.
8.   Tin and Tungsten minerals.
9.   Limestone, Dolomite and Magnesite.
10.   Ilmenite, Monazite, Zircon, Rutile, Garnet and Sillimanite.
11.   Sulphides of Copper and Iron.
12.   Coal, Fire clay and Shale.
13.   Magnetite and Apatite.
14.   Magnesite and Chromite.
15.   Talc (Soapstone and Steatite) and Dolomite.
50.   Inserted by the Finance Act, 2026, w.e.f.   1-4-2026 .