Archive for PF

No Income tax on additional interest on EPF money

No tax on additional interest on EPF money (diff. of 9.5 and 8.5 %)

The additional quantum of interest on Employees Provident Fund deposits would be exempted from income tax, the LokSabha was informed today. The provident fund trustees had on September 15 decided to raise the EPF interest rate by 1% to 9.5 for 2010-11.

However as per income tax rules interest on EPF is exempted only upto 8.5 % only .so as per present rule though the interest payable is 9.5% but interest exempted is only 8.5% means additional 1 % is taxable in employee’s hand .But now in Lok sabha Govt has declared that in rate given in income tax for exemption for interest on EPF will also be increased to 9.5 %

"The matter has been discussed with Finance Ministry and they have informed that they will revise the notification to 9.5% once it is approved by the Government," Minister of State for Labour and Employment Harish Rawat said in a written reply. The decision taken by the Central Board of Trustees of EPF to raise the interest rate would benefit 4.71 crore employees in both public and private sectors.

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Central trade unions to oppose taxing of withdrawals from savings schemes

Central trade unions to oppose taxing of withdrawals from savings schemes

The central trade unions will press for shelving of a proposal, that wants to tax withdrawals from savings schemes, including provident funds, at the pre-Budget meeting with Finance Minister Pranab Mukherjee on January 14. “(The) Finance Minister has invited trade unions for pre- budget consultations on January 14,” All India Trade Unions Congress Secretary D L Sachdev told media.
Although the central trade unions are meeting here next week to prepare their charter of demands, he said, “we would definitely raise the issue of Exempt, Exempt Tax (EET) mode for savings schemes”.
The draft Direct Taxes Code (DTC), on which the government has invited comments from public, proposed to tax all long-term savings schemes at the time of withdrawal by the subscribers.
Currently, there are no taxes on long-term savings and pension schemes. Besides EET issue, Hind Mazdoor Sabha (HMS) Secretary A D Nagpal said, “We will also demand for higher income tax slabs to provide relief to the working class.”
As part of the budgetary exercise, the minister meets the representative of different interest groups like economists, industrialists, trade unions etc to get their views on the budget. The trade unions, Sachdev said, would also press for the creation of a National Security Fund for urorganised workers in the country.
In view of unionists the funds should have a corpus of a size equal to three per cent of Gross Domestic Product of the country for the welfare of these workers.
The other major issue which could rock the meeting, is imposing service tax on the contributions made to the Employees Provident Fund scheme being run by the country’s largest retirement fund manager Employees’ Provident Fund Organisation (EPFO).
The issue came to light when some months ago, the Central Board of Excise and Customs slapped EPFO with a notice for not paying service tax on the contributions to these scheme. The scheme has around 4.7 crore subscribers across the country.

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