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Friday, 8 March 2013

Define the following terms in the income tax ordinance Appellate Tribunal, Approved Gratuity Fund, Approved Superannuation Fund







APPELLATE TRIBUNAL :-
It has been defined in the income tax ordinance.

Explanation :-
Sometimes dispute arises between the taxpayer and tax department. In this case appeal is made to Appellate tribunal. It consists of judicial as well as accountant members. It is the highest judicial authority in case of tax matters and its decision on point of facts is final. However the matter may be referred to the high court.


APPROVED GRATUITY FUND :-
Under income tax ordinance the commissioner income tax grants this approval.

Explations :-
Main Points :
(1)   This fund is maintained by the govt. and private organizations.
(2)   It is contributed by employer.
(3)   It is for the benefit of their employees.
(4)   It is normally paid to the employees at the time of retirement.
(5)   In case of death it is paid to family of the employee.
(6)   If gratuity fund is approved then employer gets a lot of benefits.

Advantages :-
This expenditure fund of the employer is treated as business expenditure, so it is deducted from the profit and net profit reduces. The amount of tax will be also reduced.


APPPROVED SUPERANNUATION FUND :-
Under income tax ordinance, the commissionor income tax approves this fund.

Main Points :
1.      This fund is maintained by the employer.
2.      It is for the benefit of the employees.
3.      Its benefit is provided after retirement.
4.      It is paid at the time of disability.
5.      If employee dies then it is paid to his family.
6.      This fund is treated as business expenditure. So net profit and taxable amount reduces.

Note : The govt. pays the pension to the widows and orphans of the deceased employees out of this fund.

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