Corporate Income Tax | Bangladesh

Provident fund is the fund where fund are accumulated during the active period of employees for his financial protection at the end of his service life, amount contributed by the employee or the employer or both employee and employer. There are three types of provident fund:

a.       Statutory provident fund

b.      Recognized provident fund

c.       Unrecognized provident fund 

 

Unrecognized provident fund is not the recognized or statutory fund. This fund is not constituted under Part B, First schedule in the Income Tax Ordinance, 1984 or under any other applicable acts or laws and is not approved by the Commissioner of Taxes. In this fund, both the employees and employer contributes and interest thereon is not included in the total income of the employee. At the time of the employee’s retirement, the accumulated balance of the UPF except employees’ contribution is included in the total income.

Definitions: “Recognized provident fund” means a provident fund which has been, and continues to be, recognized by the Commissioner in accordance with the provisions of part B of the First Schedule;

(1)   The Commissioner shall, within [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 recognizing, 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 maintaining 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 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 application is given a reasonable opportunity of being heard.   

 

Conditions to be satisfied by a recognized 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 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 fund;

c.        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;

d.       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;

e.        the accumulated balance due to an employee shall be payable on the day he ceases to be an employee of the employee of the employer maintaining the fund;

f.        save as provided in clause (e) , 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.

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 recognized provident fund shall be deemed to have been received by him in hat 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 tax (1)

Appeals –

 

A provident fund is made of commitment from both an organization and its representatives which are filled in as an advantage to be given when a worker resigns or separate on any reason. FMCI perform unique audit on this current worker's provident fund to confirm a few issues, for example, commitment prerequisites, installment from reserve, pay produced from speculation of such reserve, accomplishment of different conditions and so on. Provident Fund audit ensures the effectiveness of the Provident Fund activities. 

FMCI provides Provident Fund Audit services in the following ways: