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PF presentation (2)

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PF presentation (2)

  1. 1. Welcome
  2. 2. Presentation on Provident Funds for Workers in Private Sector’s Establishments
  3. 3. TOPICS TO BE COVERED 1. Introduction 2. Scope 3. Steps of PF establishment 4. Applicability of Fund 5. Establishment criteria 6. Administration and Management of the Fund 7. Eligibility of Contribution to the Fund 8. Contribution to the Fund 9. Investment Scope
  4. 4. 10. Recognition Merits 11. Recognition demerits 12. Audit of the accounts of the Fund 13. Expenses for maintenance, Audit and Accounts of the Fund 14. Works to be performed after formation TOPICS TO BE COVERED
  5. 5. 1. INTRODUCTION Provident Fund is a term for pension fund/savings scheme. A provident fund is a form of social safety into which workers must contribute a portion of their salaries and employers must contribute on behalf of their workers. The money in the fund is then paid out to retirees, or in some cases to the disabled who can not work.
  6. 6. 2. SCOPE: The following Act, Law, Ordinance & Rules will applicable for the F und: Bangladesh Labor Law, 2006 Income Tax ordinance, 1984 Income Tax Rules, 1984 Companies Act, 1994 Trusts Act, 1882 Securities Act, 1920.
  7. 7. 3. STEPS OF PF ESTABLISHMENT:  Resolution of the Board of directors ;  Selection of the name of the fund;  Selection of the Board of Trustees and other provisions for preparing Rules of the funds ;  Drafting deed and rules of the fund;  Notarization of deed and rules of the fund;  Apply for recognition form NBR
  8. 8. 4. APPLICABILITY OF FUND (BANGLADESH LABOR LAW, 2006 SECTION 264):  A n e s t a b l i s h m e n t i n a p r i v a t e s e c t o r m a y , f o r t h e w e l f a r e o f i t s w o r k e r s , c o n s t i t u t e a p r o v i d e n t f u n d .  A n e s t a b l i s h m e n t i n t h e p r i v a t e s e c t o r s h a l l c o n s t i t u t e a p r o v i d e n t f u n d f o r t h e b e n e f i t o f i t s w o r k e r s , i f t h r e e - f o u r t h s o f t h e t o t a l n u m b e r o f w o r k e r s e m p l o y e d i n i t s o d e m a n d b y a n a p p l i c a t i o n i n w r i t i n g . N o t e t h a t a s e s t a b l i s h m e n t c o n s t i t u t i n g a p r o v i d e n t f u n d s h a l l b e d e e m e d t o b e a p u b l i c i n s t i t u t i o n f o r t h e p u r p o s e o f t h e f u n d .
  9. 9. 5. ESTABLISHMENT CRITERIA:  T h e g o v e r n m e n t m a y m a k e r u l e s f o r c o n s t i t u t i o n o f p r o v i d e n t f u n d f o r w o r k e r s i n p r i v a t e s e c t o r ;  F u n d s h a l l b e a d m i n i s t e r e d b y a b o a r d o f t r u s t e e s ;  W h e r e a d e m a n d f o r c o n s t i t u t i o n o f a p r o v i d e n t f u n d i s m a d e , t h e e m p l o y e r o f t h e e s t a b l i s h m e n t s h a l l m a k e n e c e s s a r y r u l e s f o r i t s c o n s t i t u t i o n w i t h i n a p e r i o d o f s i x m o n t h s a n d t h e f u n d s h a l l s t a r t o p e r a t i o n b e f o r e t h e e x p i r y o f t h a t p e r i o d .
  10. 10. 6. ADMINISTRATION AND MANAGEMENT OF THE FUND: T h e r e s h a l l b e c o n s t i t u t e d a B o a r d o f Tr u s t e e s . F u n d s h a l l b e h e l d a n d a d m i n i s t e r e d b y a B o a r d o f Tr u s t e e s . E q u a l n u m b e r o f p e r s o n s n o m i n a t e d b y t h e c o l l e c t i v e b a r g a i n i n g a g e n t a n d / o r t w o p e r s o n s e l e c t e d b y t h e w o r k e r s o f t h e c o m p a n y ; a n d E q u a l n u m b e r o f P e r s o n s n o m i n a t e d b y t h e e m p l o y e r . A l l m e m b e r s o f t h e b o a r d o f t r u s t e e s s h a l l h o l d o f f i c e f o r a p e r i o d o f t w o y e a r s . A p e r s o n n o m i n a t e d b y t h e g o v e r n m e n t s h a l l b e i t s c h a i r m a n .
  11. 11. 7. ELIGIBILITY OF CONTRIBUTION TO THE FUND : All permanent worker after the completion of one years of service shall be eligible to contribute in every months to the fund.
  12. 12. 8. CONTRIBUTION TO THE FUND: Every eligible employee shall contribute unless otherwise mutually agreed, not less than seven percent and not more than eight percent of his monthly basic wages and the employer shall contribute to it an equal amount.
  13. 13. 9. INVESTMENT SCOPE : At least half of the total accumulation in such fund shall be invested for the purpose of any of the following :  I.C.B. Mutual Fund Certificates ;  I.C.B. Unit Certificates ;  Government securities including Defense and Postal Saving Certificates ; and
  14. 14. 10. RECOGNITION MERITS:  Company’s contribution to the fund shall be allowable expenditure .  Employees will get tax rebate for investment to the fund.  Income of the fund will be non taxable for the employees subject to certain condition.
  15. 15. 11. NON-RECOGNITION DEMERITS:  Company’s contribution to the fund shall be disallowed and added to total income of the company.  Employees will not get tax rebate for making such investment .  Income of the fund will taxable for employees .
  16. 16. 12. AUDIT OF THE ACCOUNTS OF THE FUND:  The Fund accounts shall be audited annually by the auditor.  The Government may, at its own cost, appoint independent auditor for a special audit of the Fund.
  17. 17. 13. EXPENSES FOR MAINTENANCE, AUDIT AND ACCOUNTS OF THE FUND:  The Cost of the audit and accounts of the shall borne by the company as the accounts of the company are audited.  The Government will bear the cost of audit if they appoint independent auditor for a special audit of the Fund.  The cost of maintenance of the fund shall be borne by the employer .
  18. 18. 14. WORKS TO BE PERFORMED AFTER FORMATION OF PF:  Apply for Recognition from NBR;  Open Separate Bank account for the funds;  Made proper investment as prescribed ;  Maintain individual ledgers and trial balance;
  19. 19. 14. WORKS TO BE PERFORMED AFTER FORMATION OF PF:  Preparation of Financial Statements of the Fund; and  Conduction of Audit by Practicing Chartered Accountants .  A statement of accounts of the fund, together with the audit report shall be forwarded to the Director of Labor within one month of the submission of audit report.
  20. 20. Thank you

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