Provident Fund Registration Pakistan

Provident Fund Registration Pakistan

Provident Fund Registration Pakistan: Provident fund is a very common retirement plan to benefit the employees, which is contributory in nature and yields a feeling of participation in employees. The Establishment settles the Provident Fund in form of Trust, required to be registered with the concerned Sub-registrar for getting the status of an independent Body. There are three types of Provident funds, which are known as:

Statutory Provident Funds, which are set up under the Provident Fund Act, 1925 and is maintained by the Government, semi Government organizations, local authorities and other such institutions. Payments from such funds does not need recognitions from the Commissioner Inland Revenue and are exempted from Income Tax.

Recognized Provident Fund, which is recognized by the Commissioner Inland Revenue under the Sixth Schedule of Income Tax Ordinance, 2001. This type of Provident Fund is maintained by private sector or organizations. Payments from such Provident fund are exempted from Income Tax.

Unrecognized Provident Fund No exemptions are available but there is no yearly taxability. Employer’s contributions and interest thereon will be taxable at the time of payments to the employees only.

The Trust is responsible for collection of contribution from employers and employees on monthly basis and to invest the same in various permissible schemes and securities.

The Provident fund is created by the employer in the form of irrevocable Trust, with the name, reflecting the name of the Company and containing the term Employees’ Contributory Provident Fund. At least three to five trustees are appointed for the management of the Trust who are named in the Trust Deed.

Provident Fund Registration Pakistan

The Provident Fund Trust Rules are separately prepared / drafted. The Trust Deed is written on the Stamp Paper. The Trust Deed and the Rules specify the terms and conditions pertaining to responsibilities, duties, rights and the liabilities of the company, employees, trustees, auditors, bankers, actuaries etc.

The Trust Deed must broadly contain the information regarding administration and management of the Fund. The eligibility of the membership and companies roles and power in the administration of the fund should also be given.

Apart from it the contributions and investments of the fund’s money should also be mentioned. The distributions of the profit among members and the terms regarding the dispute and arbitrations methods may be specified.

The Trust Deed should be registered with the Registrar of the Trust which is a mandatory requirement. One trustee can be authorized to appear before the Registrar and the copies of ID cards of all the trustees and 2 Passport sized photographs of each trustee have to be filed before the Registrar along with original Trust Deed and copy of the Rules. After its registration the Trust has to get its National Tax Number and all the trustees have also to get their NTNs.

After registration is done the application for tax exemption approval is to be filed under Part I of the Sixth Schedule of the Income Tax Ordinance, 2001 before the Commissioner Inland Revenue. Tax exemption’s approval is granted for lifetime of the Provident Fund. The conditions for the approval are also given in Part I of the Sixth Schedule of the Income Tax Ordinance, 2001.

Provident Fund Registration Pakistan

The conditions for tax exemptions are that all the employees should be employed in Pakistan or being employed by the resident employer. However, the tax exemption’s approval can be given to non-resident employer if the total ratio of employees employed outside Pakistan is not more than 10%. The contribution of employer shall not be more than the employee’s contributions.

Profit is distributed at the year-end on the closing accumulated balance of the employees. It is advisable that the calculation is based on the average balance. The members of the Provident fund can have the facility of loan / temporary withdrawal.

They can also have the facility of permanent withdrawal on certain grounds. Interest free loans can also be availed, however, they are certain limits to loans as given in the Rules. The guidelines for Provident fund and moneys are also given in the Rules.

Where the employer is not a company the employee’s contributions only and its interest shall be invested in the Securities according to the Section 20 of the Trust Act, 1882, Post Office Savings, Bank Account, National Savings, Federal Government Securities, deposits in NCB and NBP.

Other Government securities or in other established financial institutions. On the contrary where the employer is a company, both employer and employee’s contributions and interest shall be invested in accordance with the provision of Section 227 of the Companies Ordinance, 1984.

Provident Fund investment rules were issued in the year 1996 which specifies the discipline for investment in the listed Securities. These Rules have been amended from time to time specifically through SRO 261 of May 10, 2002.

The Provident fund Rules of 2005 were re-issued regarding investment of Provident funds moneys. The Provident Fund Trust have to file its annual Tax Return each year treating itself as a company.

Application for recognition of provident fund

(1) An application for recognition of a provident fund shall be made, in writing, by the employer maintaining the fund, setting out the following information, namely:-

(a)              the employer’s name and the address of the employer’s principal place of business;

(b)              the name of all employees, whether in or outside Pakistan subscribing to the fund;

(c)              the place where the accounts of the fund are or will be maintained; and

(d)              where the fund is already in existence, a copy of the last balance sheet of the fund and details of the investments of the fund.

(2)      A verification in the following form shall be annexed to the application, namely:-

“We/ I, the trustee(s) of the above named fund, do declare that what is stated in the above application is true to the best of our/my information and belief, and that the documents sent herewith are the originals or true copies thereof.”

(3)      Subject to sub-rule (4), the application shall be accompanied by the following documents, namely:-

(a)      the original of trust deed to be sighted by the Commissioner;

(b)      a copy of the trust deed to be retained by the Commissioner; and

(c)      the rules of the fund.

Provided that if the original of the trust deed cannot conveniently be produced, the Commissioner may accept, in lieu of the original, a true copy certified either by a Magistrate or in any manner provided for in the Companies Rules, 1984, in which case, an additional copy shall be furnished for retention by the Commissioner.

(4)      The application shall be lodged with the Commissioner responsible for the area/ jurisdiction in which the accounts of the fund are kept, or, if the accounts are kept outside Pakistan, lodged with the Commissioner responsible for the area/ jurisdiction in which the local headquarters for the employer are situated.

To hire us for your Provident Fund Registration and Application for Issuance of Exemption Certificate for Provident Fund Trust under section 159 read with section 151 further read with clause 57(3) of 2nd Schedule of The Income Tax Ordinance, 2001

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5 thoughts on “Provident Fund Registration Pakistan

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  4. mUHAMMAD iQBAL says:


    1) the word “Sub-registrar” pointed to which Institute. under Co. Law / under Trust ACT 2020/ or please if u could elaborate (2) Does a RECOGNIZED P. FUND UNDER TAX LAWS ALSO required to be registered under THE SINDH TRUSTS ACT, 2020. THANKS FOR YOUR ASSISTANCE.

  5. mUHAMMAD iQBAL says:


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