EPFO to challenge order on higher pension outgo

Contributions to EPS limited and is not adequate to pay a higher pension, says EPFO

The Employees Provident Fund Organisation (EPFO) plans to move the Supreme Court to review a high court order that allowed workers to draw pension on a wage above the current salary ceiling of Rs.15,000 per month. The current monthly contribution toward employees pension scheme (EPS) is limited and is not adequate to pay a higher pension, according to the retirement fund body. Any binding order on it will make the organisation financially unviable, two government officials said requesting anonymity.

“We are readying for a review petition. Pension contribution by EPFO subscribers is based on a Rs.15,000 salary ceiling. If pension outgo is calculated on the total salary above the Rs.15,000 threshold, it will be tough to maintain. It will be a negative cash flow and we may fall short of several thousand crores every year,” said one of the two officials mentioned above.

At present, every month an organized sector employee pays 12% of his basic salary as mandatory EPF contribution and a matching amount is contributed by the employer.

Of the employer’s contribution, 8.33% goes towards pension contribution and the rest 3.67% to the provident fund corpus. EPFO plans to move the apex court though the top court dismissed a special leave petition (SLP) filed by it last month against a Kerala high court order on higher pension outgo. There are three key factors hindering the EPFO from making a higher pension payout, said the other official mentioned above. First, there is no rule about collecting a higher pension contribution.

Second, a lower contribution for decades by an employee makes it untenable to get a higher pension. Third, the differential pension contribution (more by well paid subscribers based on actual salary and less by low income workers based on a Rs.15,000 salary threshold) needs a different accounting system that is not in practice at EPFO right now. “The government needs to subsidise a higher pension. Financially, EPFO is not equipped to pay that,” the second official said.

A fund crunch has already prompted the EPFO to shelve a plan to double the minimum pension from Rs.1,000 per month to Rs.2,000 per month, the official said. This was despite an internal panel of the retirement fund manager recommending an increase in the pension for EPFO subscribers.

EPFO does not have enough surplus to double the pension on its own and needs financial support to implement the scheme, which will benefit people getting a pension of less than Rs.1,000, Mint reported on 28 March. After announcing an 8.65% interest rate for its 60 million subscribers in February for 2018-19, the surplus with the retirement fund body was around Rs.150 crore, a threeyear low.

The Kerala high court had in October last year observed that while some workers have made more contribution voluntarily towards EPFO, there pension calculation was on the Rs.15,000 salary ceiling, which was not fair on workers post their retirement.

The judgement led to a debate on how a significant number of EPFO subscribers may demand pension on their actual salary and not based on the salary ceiling which is the yardstick for PF contribution.

EPFO gets an EPS contribution of around Rs. 36,000 crore per annum.

Mint, 01st May 2019

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

CA Online

Search This Blog