Central
Section 4 of The Provident Funds Act, 1925
Provisions regarding re-payments.
- (1)When under the rules of any Government or Railway Provident Fund the sum standing to the credit of any subscriber or depositor, or the balance thereof after the making of any deduction authorised by this Act, has become payable, the officer whose duty is to make the payment shall pay the sum or balance, as the case may be, to the subscriber or depositor, or, if he is dead, shall--
- (a)if the sum or balance, or, any part thereof, vests in a dependant under the provisions of section 3, pay the same to the dependant or to such person as may be authorised by law to receive payment on his behalf; or
- (b)if the whole sum or balance, as the case may be, does not exceed five thousand rupees, pay the same, or any part thereof, which is not payable under clause ( a), to any person nominated to receive it under the rules of the Fund, or, if no person is so nominated, to any person appearing to him to be otherwise entitled to receive it; or
- (c)in the case of any sum or balance, or any part thereof, which is not payable to any person under clause (a) or clause (b) pay the same,--
- (i)to any person nominated to receive it under the rules of the Fund, on production by such person of probate or letters of administration evidencing the grant to him of administration to the estate of the deceased or a certificate granted under the Succession Certificate Act, 1889 1(7 of 1889), or under the Bombay Regulation VIII of 1827, entitling the holder thereof to receive payment of such sum, balance or part, or
- (ii)where no person is so nominated, to any person who produces such probate, letters or certificate: Provided that, where the whole or any part of any sum standing to the credit of the subscriber or depositor has been assigned to any other person before the commencement of this Act, and notice in writing of the assignment has been received by t he officer from the assignee, the officer shall, after making any deduction authorised by this Act and any payment due under clause (a) to or on behalf of the widow or children of the subscriber or depositor--
- (i)if the subscriber or depositor or, if he is dead, the person to whom in the absence of any valid assignment the sum or balance would be payable under this sub -section gives his consent in writing, pay the sum or part or the balance thereof, as the case may be, to the assignee, or
- (ii)if such consent is not forthcoming, withhold payment of the sum, part or balance, as the case may be, pending a decision of a competent Civil Court as to the person entitled to receive it.
- (2)The making of any payment authorised by sub-section (1) shall be a full discharge to the Government or the railway administration, as the case may be, from all liability in respect of so much of the sum standing to the credit of the subscriber or depositor as is equivalent to the amount so paid.
Summary
- When a provident fund balance becomes payable, the designated officer must pay the subscriber directly, or if they are dead, follow specific payout rules.
- If the fund vests in (becomes the property of) a dependant under Section 3, the officer must pay the dependant or their legal representative.
- If the balance does not exceed five thousand rupees and is not payable to a dependant, the officer can pay it directly to a nominee or anyone who appears entitled to it.
- For larger balances where legal proof is required, the nominee or claimant must produce a probate (a court certificate proving a will is valid), letters of administration (a court document authorizing someone to manage a deceased person's estate), or a succession certificate.
- Making any authorized payment fully discharges the Government or railway administration from all liability regarding that money.
Practical examples
1David passes away leaving 3,500 rupees in his railway provident fund. He nominated his brother, Solomon, to receive it. Because the amount is under the 5,000 rupee limit and there are no dependants, the officer pays Solomon directly without requiring a succession certificate.
2Priya dies leaving 25,000 rupees in her Government Provident Fund. Her nominee, Arjun, is not a dependant. Because the sum is over 5,000 rupees, Arjun must obtain and produce a succession certificate under the Succession Certificate Act, 1889, before the officer can pay him.
FAQ
1. Who receives the provident fund payment if the subscriber is alive?
The officer in charge must pay the sum or balance directly to the subscriber or depositor.
2. What is the maximum balance that can be paid out without requiring probate or court certificates?
If the balance does not exceed five thousand rupees, it can be paid to a nominee or an entitled person without probate or legal certificates, provided it is not payable to a dependant under Section 3.
3. What legal documents are required to claim a balance greater than five thousand rupees?
The claimant must produce probate, letters of administration, or a certificate under the Succession Certificate Act, 1889, or Bombay Regulation VIII of 1827.
Test yourself
1.What is the monetary threshold in Section 4 below which simplified payment rules apply?
2.If a sum vests in a dependant under Section 3, how must the officer pay it?
3.Which 1889 Act is mentioned as a source for certificates to collect payments?
4.What local regulation from the year 1827 is mentioned in Section 4?
5.If an assignment made before the Act is disputed and written consent is not given, what must the officer do?
6.What is the legal effect of a payment made by an officer in accordance with Section 4(1)?