Income Tax Act, 2025
Section 3: Subs by Act 10 of 1965, s. 66 for “income-tax and super-tax” (w.e.f. 11965).
3. Subs by Act 10 of 1965, s. 66 for “income-tax and super-tax” (w.e.f. 11965).
4. Subs. by Act 16 of 1972, s. 42 for “See sections 2(5), 17(1)(iii), 36 (1)(v)” (w.e.f. 11973).
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2. Approval and withdrawal of approval.—(1) The 1[2[Principal Chief Commissioner or Chief
Commissioner] or 3[Principal Commissioner or Commissioner]] may accord approval to any gratuity fund
which, in his opinion, complies with the requirements of rule 3 and may at any time withdraw such
approval if, in his opinion, the circumstances of the fund cease to warrant the continuance of the approval.
(2) The 1[2[Principal Chief Commissioner or Chief Commissioner] or 3[Principal Commissioner or
Commissioner]] shall communicate in writing to the trustees of the fund the grant of approval with the
date on which the approval is to take effect and where the approval is granted subject to conditions, those
conditions.
(3) The 1[2[Principal Chief Commissioner or Chief Commissioner] or 3[Principal Commissioner or
Commissioner]] shall communicate in writing to the trustees of the fund any withdrawal of approval with
the reasons for such withdrawal and the date on which the withdrawal is to take effect.
(4) The 1[2[Principal Chief Commissioner or Chief Commissioner] or 3[Principal Commissioner or
Commissioner]] shall neither refuse nor withdraw approval to any gratuity fund unless he has given the
trustees of that fund a reasonable opportunity of being heard in the matter.
3. Conditions for approval.—In order that a gratuity fund may receive and retain approval, it shall
satisfy the conditions set out below and any other conditions which the Board may, by rules, prescribe—
(a) the fund shall be a fund established under an irrevocable trust in connection with a trade or
undertaking carried on in India, and not less than ninety per cent of the employees shall be employed
in India ;
(b) the fund shall have for its sole purpose the provision of a gratuity to employees in the trade or
undertaking on their retirement at or after a specified age or on their becoming incapacitated prior to
such retirement or on termination of their employment after a minimum period of service specified in
the rules of the fund or to the widows, children or dependants of such employees on their death ;
(c) the employer in the trade or undertaking shall be a contributor to the fund ; and
(d) all benefits granted by the fund shall be payable only in India.
4. Application for approval.—(1) An application for approval of a gratuity fund shall be made in
writing by the trustees of the fund to the 4[Assessing Officer], by whom the employer is assessable and
shall be accompanied by a copy of the instrument under which the fund is established and by two copies
of the rules 5[and, where the fund has been in existence during any year or years prior to the financial year
in which the application for approval is made, also two copies of the accounts of the fund relating to such
prior year or years (not being more than three years immediately preceding the year in which the said
application is made) for which such accounts have been made up], but the 1[2[Principal Chief
Commissioner or Chief Commissioner] or 3[Principal Commissioner or Commissioner]] may require such
further information to be supplied as he thinks proper.
(2) If any alteration in the rules, constitution, objects or conditions of the fund is made at any time
after the date of the application for approval, the trustees of the fund shall forthwith communicate such
alterations to the 4[Assessing Officer] mentioned in sub-rule (1), and in default of such communication,
any approval given shall, unless the 1[2[Principal Chief Commissioner or Chief Commissioner] or
3[Principal Commissioner or Commissioner]] otherwise orders, be deemed to have been withdrawn from
the date on which the alteration took effect.
The 1[2[Principal Chief Commissioner or Chief
Commissioner] or 3[Principal Commissioner or Commissioner]] may accord approval to any gratuity fund
which, in his opinion, complies with the requirements of rule 3 and may at any time withdraw such
approval if, in his opinion, the circumstances of the fund cease to warrant the continuance of the approval.
The 1[2[Principal Chief Commissioner or Chief Commissioner] or 3[Principal Commissioner or
Commissioner]] shall communicate in writing to the trustees of the fund the grant of approval with the
date on which the approval is to take effect and where the approval is granted subject to conditions, those
conditions.
The 1[2[Principal Chief Commissioner or Chief Commissioner] or 3[Principal Commissioner or
Commissioner]] shall communicate in writing to the trustees of the fund any withdrawal of approval with
the reasons for such withdrawal and the date on which the withdrawal is to take effect.
The 1[2[Principal Chief Commissioner or Chief Commissioner] or 3[Principal Commissioner or
Commissioner]] shall neither refuse nor withdraw approval to any gratuity fund unless he has given the
trustees of that fund a reasonable opportunity of being heard in the matter.
3. Conditions for approval.—In order that a gratuity fund may receive and retain approval, it shall
satisfy the conditions set out below and any other conditions which the Board may, by rules, prescribe—
the fund shall be a fund established under an irrevocable trust in connection with a trade or
undertaking carried on in India, and not less than ninety per cent of the employees shall be employed
in India ;
the fund shall have for its sole purpose the provision of a gratuity to employees in the trade or
undertaking on their retirement at or after a specified age or on their becoming incapacitated prior to
such retirement or on termination of their employment after a minimum period of service specified in
the rules of the fund or to the widows, children or dependants of such employees on their death ;
the employer in the trade or undertaking shall be a contributor to the fund ; and
all benefits granted by the fund shall be payable only in India.
4. Application for approval.—
An application for approval of a gratuity fund shall be made in
writing by the trustees of the fund to the 4[Assessing Officer], by whom the employer is assessable and
shall be accompanied by a copy of the instrument under which the fund is established and by two copies
of the rules 5[and, where the fund has been in existence during any year or years prior to the financial year
in which the application for approval is made, also two copies of the accounts of the fund relating to such
prior year or years (not being more than three years immediately preceding the year in which the said
application is made) for which such accounts have been made up], but the 1[2[Principal Chief
Commissioner or Chief Commissioner] or 3[Principal Commissioner or Commissioner]] may require such
further information to be supplied as he thinks proper.
If any alteration in the rules, constitution, objects or conditions of the fund is made at any time
after the date of the application for approval, the trustees of the fund shall forthwith communicate such
alterations to the 4[Assessing Officer] mentioned in sub-rule