The finance ministry has said the existing provident funds will continue to be recognised under the Income-tax Act for the purpose of tax breaks, if the establishment is exempt under section 17 of the Employees' Provident Funds and Miscellaneous Provisions (EPF & MP) Act, 1952. | |
| "There is no move to 'de-recognise' any fund as has been apprehended in some quarters," an official statement said today. |
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| It said Clause 56 of the Finance Bill, 2006, had proposed to insert a new condition, in addition to the existing ones, to be fulfilled by a recognised provident fund of any establishment to be eligible for recognition under the Income-tax Act. |
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| Under the Income-tax Act, a recognised provident fund enjoys certain tax benefits. For this purpose, a provident fund is considered as "recognised" if it fulfills the conditions prescribed in the Act. |
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| "Such recognised provident funds are required to fulfil the new condition by 31.3.2007 to continue enjoying the recognition under the Income-tax Act," it said, adding that the new condition only sought to provide legislative synergy between the Income-tax Act and the EPF & MP Act. |
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| The new condition is that the fund, set up by an establishment, should be recognised under the Employees' Provident Funds and Miscellaneous Provisions (EPF & MP) Act, 1952, and such establishment should be exempted from the operation of all or any provisions of any scheme referred to in Section 17 of that Act, it said. |
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| All new funds of any establishment will get recognition under the Income-tax Act only if they fulfil this new condition in addition to all existing conditions prescribed under the Income-tax Act, it added. |
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