Preamble

1. Definitions.—In this Part, unless the context otherwise requires “employer”, “employee”, “contribution” and “salary” have, in relation to gratuity funds, the meanings assigned to those expressions in rule 2 of Part A in relation to provident funds.

↩1.Subs. by Act 4 of 1988, s. 2, for “Income-tax” (w.e.f. 1-4-1988).

↩2.Ins. by Act 42 of 1970, s. 57 (w.e.f. 1-4-1971).

↩4.Subs. by Act 16 of 1972, s. 42 for “See sections 2(5), 17(1)(iii), 36 (1)(v)” (w.e.f. 1-4-1973).

3. Subs by Act 10 of 1965, s. 66 for “income-tax and super-tax” (w.e.f. 1-4-1965).

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.

1. (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.
2. (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.
3. (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—
   1. (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 ;
   2. (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 ;
   3. (c)the employer in the trade or undertaking shall be a contributor to the fund ; and
   4. (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.
4. (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. 5. Subs by Act 42 of 1970, s. 57, for “and of the accounts of the fund for the last year for which such accounts have been made up” (w.e.f. 1-4-1971). 5. Gratuity deemed to be salary.—Where any gratuity is paid to an employee during his lifetime, the gratuity shall be treated as salary paid to the employee for the purposes of this Act. 6. Liability of trustees on cessation of approval.—If a gratuity fund for any reason ceases to be an approved gratuity fund, the trustees of the fund shall nevertheless remain liable to tax on any gratuity paid to any employee. 7. contributions by employer, when deemed to be income of employer.— Where any contributions by an employer (including the interest thereon, if any) are repaid to the employer, the amount so repaid shall be deemed for the purposes of income-tax 1*** to be the income of the employer of the previous year in which they are so repaid. 8. Appeals.—(1) An employer objecting to an order of the 2[³[Principal Chief Commissioner or Chief Commissioner] or ⁴[Principal Commissioner or Commissioner]] refusing to accord approval to a gratuity fund or an order withdrawing such approval may appeal, within sixty days of such order, to the Board.
5. (2)The appeal shall be in such form and shall be verified in such manner and shall be subject to the payment of such fee as may be prescribed. 5[8A. Particulars to be furnished in respect of gratuity funds.—The trustees of an approved gratuity fund and any employer who contributes to an approved gratuity fund shall, when required by notice from the ⁶[Assessing Officer], furnish within such period, not being less than twenty-one days from the date of the notice, as may be specified in the notice, such return, statement, particulars or information, as the ⁶[Assessing Officer] may require.] 9. Provisions relating to rules.—(1) In addition to any power conferred in this Part, the Board may make rules—
   1. (a)prescribing the statements and other information to be submitted along with an application for approval; (b) limiting the ordinary annual and other contributions of an employer to the fund; ⁷[(bb) regulating the investment or deposit of the moneys of an approved gratuity fund: Provided that no rule made under this clause shall require the investment of more than fifty per cent of the moneys of such fund in Government securities as defined in section 2 of the Public Debt Act, 1944 (18 of 1944);]
   2. (c)providing for the assessment by way of penalty of any consideration received by an employee for an assignment of, or the creation of a charge upon, his beneficial interest in an approved gratuity fund;
   3. (d)providing for the withdrawal of the approval in the case of a fund which ceases to satisfy the requirements of this Part or the rules made thereunder; and
   4. (e)generally, to carry out the purposes of this Part and to secure such further control over the approval of gratuity funds and the administration of gratuity funds as it may deem requisite.
6. (2)All rules made under this Part shall be subject to the provisions of section 296. 1. The words “and super-tax” omitted by Act 10 of 1965, s. 66 (w.e.f. 1-4-1965). 1[THE FIFTH SCHEDULE ²[See section 33(1)(b)(B)(i)]] LIST OF ARTICLES AND THINGS
7. (1)Iron and steel (metal), ferro-alloys and special steels.
8. (2)Aluminium, copper, lead and zinc (metals).
9. (3)³[Coal, lignite, iron ore], bauxite, manganese ore, dolomite, limestone, magnesite and mineral oil.
10. (4)Industrial machinery specified under the heading "8. Industrial machinery", sub-heading "A. Major items of specialised equipment used in specific industries", of the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951).
11. (5)Boilers and steam generating plants, steam engines and turbines and internal combustion engines.
12. (6)Flame and drip proof motors.
13. (7)Equipment for the generation and transmission of electricity including transformers, cables and transmission towers.
14. (8)Machine tools and precision tools (including their attachments and accessories, cutting tools and small tools), dies and jigs.
15. (9)Tractors, earth-moving machinery and agricultural implements.
16. (10)Motor trucks and buses.
17. (11)Steel castings and forgings and malleable iron and steel castings.
18. (12)Cement and refractories.
19. (13)Fertilisers, namely, ammonium sulphate, ammonium sulphate nitrate (double salt), ammonium nitrate, calcium ammonium nitrate (nitrolime stone), ammonium chloride, superphosphate, urea and complex fertilisers of synthetic origin containing both nitrogen and phosphorus, such as ammonium phosphates, ammonium sulphate phosphate and ammo-nium nitro phosphate.
20. (14)Soda ash.
21. (15)Pesticides.
22. (16)Paper and pulp including newsprint.
23. (17)Electronic equipment, namely, radar equipment, computers, electronic accounting and business machines, electronic communication equipment, electronic control instruments and basic components, such as valves, transistors, resistors, condensers, coils, magnetic materials and microwave components.
24. (18)Petrochemicals including corresponding products manufactured from other basic raw materials like calcium carbide, ethyl alcohol or hydrocarbons from other sources.
25. (19)Ships.
26. (20)Automobile ancillaries.
27. (21)Seamless tubes.
28. (22)Gears.
29. (23)Ball, roller and tapered bearings.
30. (24)Component parts of the articles mentioned in item Nos. (4), (5), (7) and (9), that is to say, such parts as are essential for the working of the machinery referred to in the items aforesaid and have been given for that purpose some special shape or quality which would not be essential for their use for any other purpose and are in complete finished form and ready for fitment.
31. (25)Cotton seed oil. 1[(26) Tea.
32. (27)Printing machinery.] 2[(28) Processed seeds.
33. (29)Processed concentrates for cattle and poultry feed.
34. (30)Processed (including frozen) fish and fish products.
35. (31)Vegetable oils and oil-cakes manufactured by the solvent extraction process from seeds other than cotton seed.] 3[(32) Textiles (including those dyed, printed or otherwise processed) made wholly or mainly of cotton, including cotton yarn, hosiery and rope.
36. (33)Textiles (including those dyed, printed or otherwise processed) made wholly or mainly of jute, including jute twine and jute rope.]] THE SIXTH SCHEDULE Omitted by the Finance Act, 1972 (16 of 1972), s. 43 (w.e.f. 1-4-1973). Originally, the Schedule was inserted by the Finance Act, 1968 (19 of 1968), s. 30 and the Third Schedule (w.e.f. 1-4-1969) and was later amended by the Finance (No. 2) Act, 1971 (32 of 1971), s. 30 (w.e.f. 1-41972). 1[THE SEVENTH SCHEDULE [See section 35E] PART A _________ MINERALS 1. Aluminium ores. 2. Apatite and phosphatic ores. 3. Beryl. 4. Chrome ore. 5. Coal and lignite. 6. Columbite, Samarskite and other minerals of the "rare earths" group. 7. Copper. 8. Gold. 9. Gypsum. 10. Iron ore. 11. Lead. 12. Manganese ore. 13. Molybdenum. 14. Nickel ores. 15. Platinum and other precious metals and their ores. 16. Pitchblende and other uranium ores. 17. Precious stones. 18. Rutile. 19. Silver. 20. Sulphur and its ores. 21. Tin. 22. Tungsten ores. 23. Uraniferousallanite, monazite and other thorium minerals. 24. Uranium bearing tailings left over from ores after extraction of copper and gold, ilmenite and other titanium ores. 25. Vanadium ores. 26. Zinc. 27. Zircon.

↩1.Subs. by Act 4 of 1988, s. 2, for “Commissioner” (w.e.f. 1-4-1988).

↩2.Subs. by Act 25 of 2014, s. 4 for “Chief Commissioner” (w.e.f. 1-6-2013).

↩3.Subs. by s. 4, ibid., for “Commissioner” (w.e.f. 1-6-2013).

↩4.Subs. by Act 4 of 1988, s. 2, for “Income-tax Officer” (w.e.f. 1-4-1988).

↩2.Subs. by Act 4 of 1988, s. 2, for “Commissioner” (w.e.f. 1-4-1988).

↩3.Subs. by Act 25 of 2014, s. 4 for “Chief Commissioner” (w.r.e.f. 1-6-2013).

↩4.Subs. by s. 4, ibid., for “Commissioner” (w.r.e.f. 1-6-2013).

↩5.Ins. by Act 42 of 1970, s. 57 (w.e.f. 1-4-1971).

↩6.Subs. by Act 4 of 1988, s. 2, for “Income-tax” (w.e.f. 1-4-1988).

↩7.Ins. by Act 42 of 1970, s. 57 (w.e.f. 1-4-1971).

↩1.Ins. by Act 10 of 1965, s. 67 (w.e.f. 1-4-1965).

↩2.Subs. by Act 19 of 1968, s. 30 and the Third Schedule, for “[See sections 33(1)(b)(B)(i) and 80B(7)” (w.e.f. 1-4-1969). Earlier substituted by Act 20 of 1967, s. 33 and the Third Schedule, for"[See sections 33(1)(b)(B)(i) and 83B(7)” (w.e.f. 1-4-1968). Prior substituted by Act 13 of 1966, s. 37, for "[See section 33 (1) (iii) (c) I" (w.e.f. 1-4-1966).

↩3.Subs. by Act 15 of 1965, s. 18, for “Iron ore” (w.e.f. 1-4-1965).

↩1.Ins. by Act 13 of 1966, s. 37 (w.e.f. 1-4-1966).

↩2.Ins. by Act 19 of 1968, s. 30 and the Third Schedule (w.e.f. 1-4-1969).

↩3.Ins. by Act 14 of 1969, s. 23 (w.e.f. 1-4-1970).

↩1.Ins. by Act 42 of 1970, s. 58 (w.e.f. 1-4-1971).