Don’t be in a rush to make EPF-NPS switch: Experts

Posted by & filed under Uncategorized.

After the backlash against the tax on the Employees’ Provident Fund (EPF), the government should get ready for opposition to its proposal allowing EPF members to switch to the New Pension System (NPS). Only this time the government may be unfairly targeted because the switching rules it has framed for EPF and NPS are quite flexible and subscriber-friendly.

The proposal to switch from EPF to NPS was announced in last year’s Budget. This year’s Budget has extended a one-time tax exemption to such switching. A legislation to amend the Employees’ Provident Fund & Miscellaneous Provisions Act has already been framed and is lying with the Law Ministry.

The amendment allows EPF subscribers to make a one-time switch to the NPS. Within 30 days of applying, the entire balance in his EPF account will be transferred to the NPS. Opting for the NPS would also mean the individual exits from Employees’ Deposit LinkedInsurance as well as the Employees’ Pension Scheme (EPS). The Bill is silent on what this means for the amount mandatorily deducted from the employer’s contribution and put into the EPS.

But the best part about the proposal is that once he shifts to NPS, the employee will have a one-time chance to return to the EPF fold. “It’s a progressive legislation which offers a lot of flexibility to the subscriber,” says Manoj Nagpal, CEO of Outlook Asia Capital.

However, on rejoining the EPF, the subscriber will be treated as a new entrant and will not be eligible for benefits he might have accumulated in his previous tenure in the EPF. Also, after this ghar wapsi, the subscriber will not have the option to go back to the NPS.

The amendment also seeks to ensure that employers don’t force a particular scheme down the throats of employees. “No employer shall force any employee to opt for any particular scheme as a condition of employment or service,” states the amendment.

However, even though the amendment gives a lot of flexibility, there is a lot of opposition against this move. The government could not convince EPFO board members to agree to the move. “We are totally against the portability move,” says Virjesh Upadhyay, all-India general secretary of the Bharat Mazdoor Sangh.

Trade unions are opposed to the NPS because it is a defined contribution scheme, unlike the defined benefit schemes like the EPS and the Family Pension Scheme (FPS).

“These schemes are not comparable,” says Upadhyay. Unlike the NPS, where you have to buy annuities for pension, the pension from EPS and FPS are based on the last drawn salary and tenure of contribution.

Though the switching facility is yet to become a reality, financial planners and tax experts say that switching to NPS may not be a good idea. This is because the proposed tax on 60% of the EPF (if not rolled back) will apply only for contributions made from April1, 2016. The existing corpus will remain tax free. On the other hand, 60% of the NPS is still under the EET regime. “Don’t shift your existing EPF corpus to NPS till you are sure that the money will also remain tax free in the NPS,” says tax expert Balwant Jain.

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Arun Jaitley rolls back proposal to tax EPF withdrawal

Posted by & filed under Uncategorized.

Finance minister Arun Jaitley on Tuesday announced the rollback of proposed tax  on withdrawals from employees’ provident fund.



“The purpose to tax EPF withdrawals was to encourage a pensioned society. However, in view of the representations made to the government against the proposed tax, I withdraw it” finance minister Arun Jaitley informed the Lok Sabha on Tuesday.

However, the tax proposal for NPS scheme has been retained.

Jaitley in his Budget for 2016-17 had proposed that 60 per cent of the withdrawal on contribution to employee PF made after April 1 this year will be subject to tax. This would apply to superannuation funds and recognised provident funds including EPF.




The proposal has come under attack from parties, unions and other stakeholders. Stepping up pressure on the Centre, Congress vice-president Rahul Gandhi had said he will continue to fight till it rolls back the proposal for levying tax on EPF withdrawals.

Following a backlash from employees union and political parties, Jaitley had already signalled willingness to reconsider the proposal.




“There has been some reaction. When the debate comes up in Parliament, I will give the government’s response as to what decision we finally take,” he had said earlier this week



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Trade unions to hold protest on March 10 against PF move

Posted by & filed under Uncategorized.

Central trade unions will observe day-long protest across the country on Thursday against the government’s “attack on PF” and “anti-labour anti-labour policies”, a union leader said today. 

“We observe a protest on March 10 against attack on PF and anti-labour practices being adopted by the government,” All India Trade Union Congress General Secretary Gurudas Dasgupta told PTI. 

“Government has not been considering our demands. Even they are not talking to us. Therefore, we will “observe a protest. It is primarily a protest against PF tax and other issues related to workers.” 



Government has not been considering our demands. Even they are not talking to us. Therefore, we will observe a protest. It is primarily a protest against PF tax and other issues related to workers.” 

RSS-backed Bharatiya Mazdoor Sangh (BMS), which has decided not to participate in the protest, said the other central unions have not discussed the issues circulated to them it for putting up before government and they have already lodged their discontent through a protest on February 24. 

BMS Zonal Organisation Secretary Pawan Kumar Singh said, “We are not part to this protest on March 10. We have circulated a discussion paper to all central trade unions but they did not had a word with us.” 

We told them that government has moved positively on certain issues like increasing Bonus eligibility ceiling. Similarly, let’s bring the government on board on other issues. But they did not discuss anything on any issue listed by us. We are not part to this protest.” 

The government has, however, promised to consider demands for a partial rollback of the proposal. 

Earlier, 11 central trade unions in a joint statement said, “All the Central Trade Unions met on January 27, 2016 and resolved to continue their protest action against the anti labour policies of the Central and some State governments.” 

The trade unions had decided to observe March 10 as All India Protest Day against government’s indifference to the 12-point charter of demands and its unwillingness to restart discussions for working out concrete steps for resolution of the issues, they had said in January. 


The Joint statement was also signed by the BMS.

courtesy @http://economictimes.indiatimes.com/

 

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INCREASE IN HOUSE RENT ALLOWANCE EXEMPTION LIMIT U/S 80GG

Posted by & filed under Income Tax 2016.

As you have seen on various website and TV that House rent allowance limit has been increased from 24000/- from 60000/- but this limit is not applicable for salaried persons getting HRA. 

The existing provisions of Section 80GG provide for a deduction of any expenditure incurred by an individual in excess of ten per cent of his total income towards payment of rent in respect of any furnished or unfurnished accommodation occupied by him for the purposes of his own residence if he is not granted house rent allowance by his employer, to the extent such excess expenditure does not exceed two thousand rupees per month or twenty-five per cent of his total income for the year, whichever is less, subject to other conditions as prescribed therein. 


In order to provide relief to the individual tax payers, it is proposed to amend section 80GG so as to increase the maximum limit of deduction from existing Rs. 2000 per month to Rs. 5000 per month.

Detail of deduction for house rent under  section 80GG .

Deduction under section 80GG for house rent paid:

Deduction u/s 80GG is available if following condition are satisfied
  • Deduction is available to Individual Assessee only.
  • He has not received HRA(house rent allownace ) from his employer if he is a salaried person otherwise he should be self employed.
  • He has paid house rent for his own residence.
  • He or his spouse or his minor child or HUF(of which he has a member) should not have a residential house where he ordinarily resides or performs duties of his office or employment or carries on his business or profession;
  • He should not have a house owned by him, which is under his occupation and value of that is not being taken as nil under section 23(2)(a) or 23(4).
  • A declaration on Form 10BA should be submitted .
so if conditions are satisfied then you can claim deduction u/s 80GG for house rent paid

Amount of deduction:Least of the following is deductible u/s 80GG
  • Rs 5000 per month wef 01.04.2016 (2000 per month up to 31.03.2016).
  • 25 % of total income
  • the excess of actual rent paid over 10 % of total income
Total Income means income excluding long term and short term gain under section 111A and income referred to in section 115A or 115D but before making any deduction under section 80C to 80U.



@courtesy http://www.simpletaxindia.net/

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INCOME TAX SLABS FY 2016-17 AFTER BUDGET 2016 ON 29-02-2016

Posted by & filed under Income Tax 2016.

The Union Finance Minister Shri Arun Jaitley in his Budget Speech ON 29/02/2016 in Lok Sabha  proposed no change in the rate of personal Income-tax. He announced the tax proposals with no change in the rate of tax for companies in respect of the income earned in the financial year 2016-17 assessable in the assessment year 2017-18.

However rebate under section 87A has been increased to 5000 from 2000/- earlier.But 87A relief is available only to persons having taxable income up to 500000/- (income after all deductions).

So if your Taxable income is more than 5 lakh then no benefit is available to you.

Further if your income is more than one crore then surcharge has been increased to 12  to 15%.



ASSESSMENT YEAR 2017-18 RELEVANT TO FINANCIAL YEAR 2016-17


1. Tax Slab for an Individual (resident & below 60 years) or HUF/AOP/BOI/AJP
Income Slabs
Tax Rates
Total income up to Rs. 2.5 Lac
0% Tax
Total income above Rs. 2.5 Lac and below Rs.5 Lac
10% on amount exceeding Rs. 2.5 Lac
Total income above Rs. 5 Lac and below Rs.10 Lac
20% on Income exceeding Rs. 5 Lac + Rs. 25,000
Total income more than Rs. 10 Lac
30% on Income exceeding Rs. 10 Lac + Rs. 1,25,000

* u/s 87A the Individual having taxable income up to Rs. 5 Lac , can claim rebate, on the Actual Tax amount subject to a maximum of Rs.5,000 (earlier limit was 2000)

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 15%(earlier 12%) of Income tax is applicable
2. Tax Slab for an Individual (resident & above 60 years but below 80 years)
Income Slabs
Tax Rates
Total income up to Rs. 3.00 Lac
0% Tax
Total income above Rs. 3.00 Lac and below Rs.5 Lac
10% on amount exceeding Rs. 3.00 Lac
Total income above Rs. 5 Lac and below Rs.10 Lac
20% on Income exceeding Rs. 5 Lac + Rs. 20,000
Total income more than Rs. 10 Lac
30% on Income exceeding Rs. 10 Lac + Rs. 1,20,000

* u/s 87A the Individual having taxable income up to Rs. 5 Lac , can claim rebate, on the Actual Tax amount subject to a maximum of Rs.5,000 (earlier limit was 2000)


Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 15% (earlier 12%)of Income tax is applicable

3. Tax Slab for an Individual (resident & above 80 years)
Income Slabs
Tax Rates
Total income up to Rs. 5 Lac
0% Tax
Total income above Rs. 5 Lac and below Rs.10 Lac
20% on Income exceeding Rs. 5 Lac
Total income more than Rs. 10 Lac
30% on Income exceeding Rs. 10 Lac + Rs. 1 Lac

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 15%(earlier 12%) of Income tax is applicable
EDUCATION CESS
The amount of Income-tax shall be increased by Education Cess of 3% on Income-tax.


@courtesy http://www.simpletaxindia.net/



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Budget 2016-17 surprise: EPF will now be partially taxable

Posted by & filed under Budget 2016.

The changes announced by the finance minister Arun Jaitley in the Budget can reduce your retirement savings significantly when you withdraw it. The FM has made Employee Provident Fund (EFP) and National Pension Scheme (NPS) withdrawals on retirement partially taxable.

The EPF until now followed a exempt-exempt-exempt taxation structure. This means, there was no tax on investment, on interest accrued and on withdrawal. In case of NPS, the funds that you receive in your bank account was taxable.

“In case of superannuation funds and recognised provident funds, including EPF, the same norm of 40 per cent of corpus to be tax free will apply in respect of corpus created out of contributions made on or from April 1, 2016,” finance minister Arun Jaitley said in his Budget speech.


This essentially means when you withdraw from EPF, the 60 per cent of the corpus, accumulated post April 1,2016, will attract tax and the remaining 40 per cent will not. According to the current provisions of the NPS, out of the total corpus, the person needs to buy an annuity plan with the 40 per cent. Of the remaining money that he will get in his bank account, 60 per cent will be taxable.
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Pay interest on retained PF or give entire amount: Unions

Posted by & filed under Provident fund -News.

Trade Unions including RSS-backed Bhartiya Mazdoor Sangh (BMS) have demanded that retirement fund body EPFO shall either allow unemployed subscribers to withdraw their entire PF or give interest on retained amount. 

“We will demand from Labour Minister that either EPFO pays entire amount in PF account or pay interest on the retained amount to unemployed subscribers opting for withdrawal as per new norms,” Indian National Trade Union Congress Vice-President and an EPFO trustee Ashok Sing told PTI. 

Earlier this month, Employees Provident Fund Organisation (EPFO) tightened the norms for withdrawals of PF accumulations for its over five crore subscribers. 


Now the subscribers can withdraw only 90 per cent of their own contributions to PF account and interest earned on that after pleading over two months of unemployment. 

 Earlier they were allowed to withdraw entire PF accumulations after showing two months of unemployment. 


Under the new norms two months unemployment condition shall not apply in cases of women subscribers resigning for getting married or on account of pregnancy or child birth. 

BMS General Secretary Virjesh Upadhyay said, “The EPFO must give interest on the retained amount in case unemployed subscribers opts for withdrawal. They should not make the account inoperative.” 


The new norms are silent on crediting interest to such accounts where subscribers opts for withdrawal due to unemployment and does not contributes to his account for a period of more than three years. 

A PF accounts becomes inoperative after no contribution is made for continuous 36 months period. This provision was made in the scheme to avoid parking of funds with EPFO. 

Under the new norms their could be a situation where subscribers opt for withdrawals of his PF accumulation pleading unemployment and does not get a job even after three years. In those cases the account will become inoperative and no interest will be credited. 

 The new norms also provides that subscribers will not be able to claim withdrawal of PF after attaining 54 years of age. They would have to wait till attaining the age 57 years. 


 As per the earlier norms, subscribers were allowed to claim 90 per cent of their accumulations in their PF account at the age of 54 years and their claims were settled just one year before their retirement. 


The big change is that now under this facility, the subscriber would be able to withdraw his contribution and interest earned on it unlike 90 per cent of the total accumulations earlier. 

 In another change, EPFO has made it mandatory to wait till attaining the age of 57 for claiming PF withdrawal for transferring that to the Life Insurance Corporation of India for investment in Varishtha Pension Bima Yojana. 


Earlier norms used to allow subscribers to claim 90 per cent of their accumulations for investing in the scheme after attaining the age of 55 years 


@courtesy http://economictimes.indiatimes.com/

Post Views: 498

ESIC Toll Free Helpline Numbers

Posted by & filed under Esic Benefits.

ESIC Corporation has setup the Public Grievances Redressal Systems at all levels i,e HQRS/Regional/Sub Regional/Divisional/Branch Offices/ESIC Dispensaries /Esi Hospital 

In order to speed up the grievances under the ESIC Schemes various measures have been taken by the corporation it includes a Toll free Helpline Number 1800-11-2526 activated at the qrs Office  besides this in every state the following helpline numbers have been activated 


Post Views: 1,062