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| 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
Definition
“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)”
Explanation
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