Comparison of SCHEDULE XI "RECOGNISED PROVIDENT FUNDS" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....ations, and at least one change in statutory reference governing "Government securities." Impacted parties include employers, trustees of funds, employees participating in such funds, tax authorities and the Board (Rule-making body). No effective date is stated in the texts provided. Background & Scope Statutory hook: Schedule XI [See section 2(91)] (recognised provident funds; approved superannuation and gratuity funds) as part of the Income-tax law corpus. The Schedule sets out recognition/approval regimes, definitions, conditions for recognition/approval, tax treatment of contributions/accumulations, reporting and procedural obligations, powers of the Board to make rules, and appeals against adverse administrative orders. Definitions p....

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.... administrative authority. * Tax treatment is tied to compliance with specified structural conditions (trust form, vesting, nature of fund assets, payment/withdrawal rules, and residency/employee scope). * Where conditions are not met (or not applicable), ordinary tax rules apply (e.g., accumulated balances may be included in total income and treated as salary in certain contexts). Exceptions/Provisos The Schedule contains several provisos and relaxations: * Paragraph 1: Exclusion - Schedule does not apply to funds covered by the Provident Funds Act, 1925. * Part A paragraph 5: Approving authority may relax conditions (e.g., funds maintained by employers with principal place of business outside India provided <=10% employees outsi....

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....v). Interplay The Schedule expressly interacts with: * Provident Funds Act, 1925 - funds under that Act are excluded from this Schedule. * Employees&#39; Provident Funds and Miscellaneous Provisions Act, 1952 - paragraph 4(f) ties eligibility to establishments covered u/s 1(3) or notified u/s 1(4) of that Act, and to exemptions u/s 17 schemes. * Other tax provisions - paragraph 6 links to rates fixed by Central Government by notification for interest treatment; paragraph 10 invokes Chapter XIX-B procedural rules for tax deduction at source (TDS) as if the balance were salary. * Rule-making restrictions reference a statute governing "Government securities" (the Bill and Act texts differ as to which statute supplies the definition),....

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....ermitted investments. * Substantive alignment and rewording of specific paragraphs: In some paragraphs the Act clarifies or restructures language (for example, paragraph 5(3) in Document 1 states "Irrespective of anything contained in paragraph 4(e) or (i),-" while Document 2 states "Irrespective of anything contained in paragraph 4(e) or paragraph 4(i),-".) These are editorial only. * Practical impact: None substantive; only formatting/drafting clarity. * Headings, numbering and minor content differences: Document 1 uses headings such as "Accounts of recognised provident funds.- (1) The accounts..." while Document 2 uses similar headings but sometimes adds slight wording changes (e.g., "Appeal" vs "Appeals", "Liabilities of trustees ....

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....assets, payment rules, employee/residency thresholds) to secure recognition/approval and preserve tax exemptions. Failure may expose accumulated balances to inclusion in employee&#39;s taxable income and create TDS obligations under Chapter XIX-B. * Record-keeping/evidence: The Schedule requires maintenance of prescribed accounts, availability of records for inspection and provision of abstracts to the Assessing Officer. Trustees should retain clear records of employee contributions credited, employer contributions, interest calculations, transfers between funds, and documentation supporting conditions for exemption (e.g., proof of continuous service, reasons for termination). * Investment compliance: Trustees must monitor permitted inv....