Report No. 12
290. Conditions to be satisfied by recognised Provident Funds.-
In order that a provident fund may receive and retain recognition, it shall, subject to the provisions of section 291 [sections 58C(1), provisos to clauses (a), (b), (d), 58J(4), 58(D), 58(C)(1)(g), latter part], satisfy the conditions set out below and any other conditions which the Central Government may, by rules, prescribe-
[Section 58C(1), opening lines]
(a) All employees shall be employed in India, or shall be employed by an employer whose principal place of business is in India.
[Section 58C(1)(a), main para.]
(b) The contributions of an employee in any year shall be a definite proportion of his salary for that year, and shall be deducted by the employer from the employee's salary in that proportion, at each periodical payment of such salary in that year, and credited to the employee's individual account in the fund.
[Section 58C(1)(b), main para.]
(c) The contributions of an employer to the individual account of an employee in any year shall not exceed the amount of the contributions of the employee in that year, and shall be credited to the employee's individual account at intervals not exceeding one year.
(d) The fund shall consist of contributions as above specified and of donations, if any, received by the trustees, of accumulations thereof, and of interest (simple and compound), credited in respect of such contributions, donations and accumulations, and of securities purchased therewith and of any capital gains arising from the sale, exchange or transfer of capital assets of the fund, and of no other sums.
[Section 58C(1)(d), main para.]
(e) The fund shall be vested in two or more trustees or in the Official Trustee under a trust which shall not be revocable save with the consent of all the beneficiaries.
(f) The employer shall not be entitled to recover any sum whatsoever from the fund, save in cases where the employee is dismissed for misconduct or voluntarily leaves his employment otherwise than on account of ill-health or other unavoidable cause before the expiration of the term of service specified in this behalf in the regulations of the fund.
In such cases the recoveries made by the employer shall be limited to the contributions made by him to the individual account of the employee, and to interest (simple and compound) credited in respect of such contributions and accumulations thereof, in accordance with the regulations of the fund.
(g) The accumulated balance due to an employee shall be payable on the day he ceases to be an employee of the employer maintaining the fund.
[Section 58C(1)(g), earlier part)
(h) Save as provided in clause (g), or in accordance with such conditions and restrictions as the Central Government may, by rules, prescribe, no portion of the balance to the credit of an employee shall be payable to him.