Understanding Approval of a Gratuity Trust:
As per Section 2(5) of the Income Tax Act, 1961, unless the context otherwise requires, the term “approved gratuity fund”, means a gratuity fund which has been and continues to be approved by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the rules contained in Part C of the Fourth Schedule.
As per Section 2(6) of the Income Tax Act, 1961, unless the context otherwise requires, the term “approved superannuation fund” means a superannuation fund or any part of a superannuation fund which has been and continues to be approved by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the rules contained in Part B of the Fourth Schedule.
As per Section 2(38) of the Income Tax Act, 1961, recognised provident fund" means a provident fund which has been and continues to be recognised by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the rules contained in Part A of the Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees' Provident Funds Act, 1952 (19 of 1952)
Implication of non Approved Gratuity Fund/Superannuation Fund/Provident Fund
- Contribution by an employer to an Approved Gratuity/Superannuation/Provident Fund for exclusive benefit of its employees is an allowable deduction u/s 36(1)(iv) & (v) of Income Tax Act, 1961. This means if Gratuity Trust, Superannuation trust and Provident Fund are not Approved, the contribution made by Company to Gratuity/ Superannuation Trust & Provident Fund is not allowable as deduction in computing Income of the Company.
- As per Section 10(25) of Income tax Act any income received by trustees or board of trustees of following funds are fully exempt
- Recognized Provident fund
- Approved superannuation fund
- Approval of a gratuity trust
Conclusion: Streamlining the Approval Process for Gratuity Trusts in Pune
When it comes to securing the approval of a gratuity trust in Pune, businesses must navigate the complexities of the Income Tax Act, 1961. The act outlines the regulations for gratuity trusts, superannuation trusts, and provident funds, detailing the benefits of getting the requisite approvals from the relevant tax authorities.
Pradeep G Jadhav & Co is a trusted firm with extensive experience in assisting companies in obtaining the approval of gratuity trusts, superannuation trusts, and provident funds. When these financial arrangements are approved, businesses can enjoy numerous tax advantages and other benefits. Below, we delve deeper into the implications of not obtaining such approvals and how it can impact a business.
Implications of Non-Approval:
Deduction Denial: Contributions made by an employer to a gratuity, superannuation, or provident fund are eligible for deduction under Section 36(1)(iv) & (v) of the Income Tax Act, 1961. However, if the fund is not approved, these contributions will not be deductible, leading to higher taxable income for the company.
Taxable Income for Trusts: Under Section 10(25) of the Income Tax Act, income received by trustees or boards of trustees of approved funds is fully exempt. Without approval, the trust’s income, including contributions from the company and interest income from funds invested with the LIC, will be subject to taxation.
At Pradeep G Jadhav & Co, we offer expert services to guide businesses through the process of obtaining approvals for their gratuity trusts, superannuation trusts, and provident funds. Our team ensures a smooth, efficient experience for our clients, helping them maximize the benefits available under the law.
Companies in need of approval or recognition of their gratuity, superannuation, or provident funds can rely on our comprehensive services. Get in touch with us today to discuss your financial needs and ensure your company is in compliance with the Income Tax Act.
For businesses in Pune and beyond, securing the approval of a gratuity trust and other employee benefit plans is crucial for financial efficiency and compliance. Trust Pradeep G Jadhav & Co to navigate the process for you, ensuring a seamless and successful outcome. Contact us today!
Pradeep G Jadhav & Co is a reputable firm with a proven track record in assisting businesses through the intricate process of obtaining the approval of gratuity trusts, superannuation trusts, and provident funds. Our expertise extends to guiding clients from the initial setup phase through to ongoing maintenance and compliance with regulations.
Here’s why working with us can benefit your business:
Tax Savings: By securing approval for your gratuity trust, superannuation trust, and provident fund, you can claim the employer’s contributions as a deduction under Section 36(1)(iv) & (v) of the Income Tax Act. This reduces your company’s taxable income and improves your overall financial health.
Tax Exemption for Trusts: Once approved, the income received by trustees or boards of trustees, including contributions from the company and interest income from funds set up with the LIC, is fully exempt under Section 10(25) of the Income Tax Act. This translates to significant tax savings for your trust.
Compliance and Peace of Mind: Navigating the regulatory landscape and meeting all requirements for approval can be a challenging task. Our team handles the entire process for you, ensuring that all submissions and paperwork are completed accurately and efficiently, minimizing the risk of errors or rejections.
Custom Solutions: We understand that every business is unique. That’s why we offer tailored solutions to meet your specific needs and goals, ensuring that your gratuity trust, superannuation trust, and provident fund are set up and managed in a way that aligns with your company’s objectives.
Whether you are looking to establish a new gratuity trust or seeking to maintain compliance for your existing superannuation or provident fund, Pradeep G Jadhav & Co is here to support you. Our experienced team stays up to date with the latest tax laws and regulations to provide you with the most current and accurate advice.