Income Tax Act, 2025
Section 14: Treatment of fund transferred by employer to trustee.—(1) Where an employer, who
14. Treatment of fund transferred by employer to trustee.—(1) Where an employer, who
maintains a provident fund (whether recognised or not) for the benefit of his employees and has not
transferred the fund or any portion of it, 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 trustees
(without addition of interest, and exclusive of the employee's contributions and interest thereon) shall, if
the employer has made effective arrangements 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 37, incurred in the previous year in which the accumulated balance due to the
employee is paid.
15. Provisions relating to rules.—(1) In addition to any power conferred by this Part, the Board may
make rules—
(a) prescribing the statements and other information to be submitted along with an application for
recognition;
(b) limiting the contributions to a recognised provident fund by employees of a company who are
shareholders in the company;
1[(bb) regulating the investment or deposit of the moneys of a recognised provident fund:
Provided that no rule made under this clause shall require the investment of more than fifty per
cent. of the moneys of such fund in Government securities as defined in section 2 of the Public Debt
Act, 1944 (18 of 1944);]
(c) providing 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 provident
fund;
(d) determining the extent to and the manner in which exemption from payment of 2[tax] may be
granted in respect of contributions and interest credited to the individual accounts of employees in a
provident fund from which recognition has been withdrawn; and
(e) generally, to carry out the purposes of this Part and to secure such further control over the
recognition of provident funds and the administration of recognised provident funds as it may deem
requisite.
(2) All rules made under this Part shall be subject to the provisions of section 296.
Where an employer, who
maintains a provident fund (whether recognised or not) for the benefit of his employees and has not
transferred the fund or any portion of it, 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.
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 trustees
(without addition of interest, and exclusive of the employee's contributions and interest thereon) shall, if
the employer has made effective arrangements 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 37, incurred in the previous year in which the accumulated balance due to the
employee is paid.
15. Provisions relating to rules.—
In addition to any power conferred by this Part, the Board may
make rules—
prescribing the statements and other information to be submitted along with an application for
recognition;
limiting the contributions to a recognised provident fund by employees of a company who are
shareholders in the company;
1[
regulating the investment or deposit of the moneys of a recognised provident fund:
Provided that no rule made under this clause shall require the investment of more than fifty per
cent. of the moneys of such fund in Government securities as defined in section 2 of the Public Debt
Act, 1944 (18 of 1944);]
providing 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 provident
fund;
determining the extent to and the manner in which exemption from payment of 2[tax] may be
granted in respect of contributions and interest credited to the individual accounts of employees in a
provident fund from which recognition has been withdrawn; and
generally, to carry out the purposes of this Part and to secure such further control over the
recognition of provident funds and the administration of recognised provident funds as it may deem
requisite.
All rules made under this Part shall be subject to the provisions of section 296.