Skip to main content

EPFO Plans One-time Bonus of Rs 750Cr in FY16

HELPFUL MODE Move may translate into double-digit returns for subscribers; earlier the ministry was planning to hike interest rate to 8.95%

The Employees' Provident Fund Organisation is considering doling out a Rs 750 crore bonus to its subscribers for 2015-16 instead of raising the interest rate, a first of its kind move that could translate into double-digit returns for crores of workers on their retirement funds. EPFO had earlier proposed raising the interest rate to 8.95% in the current fiscal year, compared with 8.75% in 2013-15 and 2014-15, based on its earnings estimate for the year.

The proposal had met with some resistance from the finance ministry as it would put pressure on it to raise interest rates on small savings schemes and would not be sustainable go ing forward.

Therefore, the retirement fund body that manages the savings of more than 5 crore organized sector workers is considering a onetime bonus payment.

“We are considering the option of bonus for the first time because this would substantially benefit people in the low income bracket who are otherwise not entitled for an income tax exemption for deductions under PF,“ a senior government official, who is privy to the proposal, told ET.

Only those subscribers who have contributed for 12 months in a row would be eligible for the bonus. As per EPFO's internal estimate, around half its subscribers would get bonus this year if the proposal went through with this condition.

“In a way we are introducing differential interest rate for our subscribers under which low income people would get double-digit interest rate for their deposits in the current fiscal (year),“ the official said, speaking on the condition of anonymity.

The February 16 meeting of EPFO's Central Board of Trustees ­ it includes representatives of the government, employees and employers ­ would weigh both options (bonus payout and an increase in interest rate) and will make a final decision. To become effective, it will then have to be notified by the finance ministry.

The proposal of differential in terest rate, however, is likely to face stiff opposition from trade unions including RSS-affiliate Bhartiya Mazdoor Sangh.

“We don't appreciate the idea because it is only benefiting a few and not all EPFO subscribers. What they propose to distribute as bonus is the surplus income from the contribution of all employees and hence it should be equally distributed,“ Vrijesh Upadhyay of BMS said.

EPFO provides the interest from the returns on investments it makes, without any assistance from the government. So, workers' representative are of the view that there is no difficulty in providing a higher rate of interest for the current fiscal year. 

The Economic Times, New Delhi, 11 Feb 2016

Comments

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6

Jaitley plans to cut MSME tax rate to 25%

Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem

Don't forget to verify your income tax return in August: Here's the process

  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s