|gratuity fund law in pakistan|
Approved Gratuity Fund [ section 2(3)]
Both public and private sector organization’s provide different types of retirement incentives to their employees. These incentives are called Gratuity funds. The approve Gratuity fund is same like this fund but this is approved by the authorities. The fund is great benefit for the employees because after complete their job they will get lum sum amount as Gratuity fund do let’s have a look on the definition of Gratuity fund
“Gratuity fund is a lum sum amount received by an employee from the employer at the time of retirement”.
Approved Gratuity Fund
“Approved gratuity fund means a gratuity fund approved by the commissioner inland revenue in accordance with part-III of sixth schedule of income tax ordinance 2001(Pakistan)”
Maintenance of fund
Government and private organization’s maintain gratuity fund for the benefit of their employees. However mostly in Pakistan and india only government organization’s provide gratuity fund. But it is also the duty of private organization to maintain gratuity fund for their employees.
Contribution of fund
The total amount of gratuity fund is contributed by the employer because it is the duty of employer to provide gratuity fund to their employees at the time of retirement
Time of Payment
The amount of gratuity is paid to the employee by employer at the time of retirement but in case of death of employee the Amount of gratuity fund is paid to the family of employee .
Type of Payment
The gratuity fund is not paid in the form of pension. By pension we mean the amount paid in small pieces. The Gratuity fund is paid in the form of lum sum amount. It mean it’s a one time payment only
Approval of fund
For the approval of gratuity fund:
i) Application is submitted to commissioner of income tex
ii) 90% or more employees of the organization should be working in Pakistan.
Reduction of Tex
For organizayion this fund is treated as business expenditure, so it reduces the net profit and Tex also