Documents Required for Provident Fund Recognition with FBR under Income Tax Ordinance

Employers in Pakistan can establish Provident Funds (PF) for their employees to encourage savings and provide a retirement benefit. For these funds to be recognized by the Federal Board of Revenue (FBR) and enjoy tax benefits, specific documentation needs to be submitted. This article outlines the documents required for Provident Fund recognition under the Income Tax Ordinance, 2001.

Required Documents:

1. Application for Recognition:This written application should be addressed to the Commissioner responsible for the area where the fund's accounts are maintained (or will be maintained).The application should include: Employer's name and principal place of business address. Names of all employees (domestic and foreign) subscribing to the fund. Location where the fund's accounts are (or will be) maintained. If the fund is existing, a copy of the latest balance sheet and details of its investments.
2. Verification:A verification form, signed by the fund's trustee(s), needs to be attached to the application. This form declares the truthfulness of the information provided in the application and the authenticity of the submitted documents.
3. Trust Deed:The original trust deed needs to be presented for the Commissioner's verification. A copy of the trust deed will be retained by the Commissioner. In exceptional cases, a certified true copy (by a Magistrate or as per Companies Rules, 1984) can be submitted with an additional copy for retention.
4. Fund Rules:A copy of the fund's rules outlining its operation and management should be included in the application package.

Additional Information:

• The application process typically involves submitting the documents to the Commissioner responsible for the area where the fund's accounts are kept.
• If the accounts are maintained outside Pakistan, the application process might differ.
• It's advisable to consult with a tax professional to ensure all necessary documents and information are included for a smooth application process.

Benefits of Provident Fund Recognition:

• Recognized provident funds offer tax benefits for both employers and employees.
• Employers can deduct contributions made to the fund from their taxable income.
• Employees enjoy tax-exempt interest earned on their contributions until withdrawal.

Conclusion:

Obtaining Provident Fund recognition from the FBR can be a valuable strategy for employers in Pakistan. By understanding the required documents and following the application process, employers can establish a tax-efficient employee benefit scheme.

This article was published at Documents Required for Provident Fund Recognition with FBR