newsletter-march-new-2016
While rolling out the Union Budget 2016, Hon'ble Finance Minister had proposed to impose Tax for 60% of total amount withdrawn from the accumulated EPF balance at the time of retirement. After reviewing the impact of the proposal on salaried tax payers, the government has decided to roll back the budget proposal.
Provident fund withdrawal policy amendedTo discourage early withdrawals and help individuals maintain funds for their retirement, the EPFO department has come up with following changes.
S.No Subject Existing Scheme Amended Scheme 1. Continuity of PF Membership Employee can withdraw full amount from his/her PF fund if he/she is terminated from employment and remains unemployed for 60 days. Indian employees will continue to be members of the fund even if they cease to be employees of a covered establishment. An individual cannot withdraw the employer’s contribution (including interest) until retirement or 58 years whichever is later. 2. Increase in age limit for partial withdrawal Employees may withdraw up to 90% of their PF balance any time after attaining 54 years of age or within one year before their actual retirement on superannuation, whichever is later. The age limit has been increased from 54 years to 57 years. 3. Increase in retirement age Employees may withdraw the full amount standing to their credit in the fund on retirement from service after attaining the age of 55 years. The age limit has been increased to 58 years. EPFO has framed an Incentive Refund Scheme for employersEPFO has framed an Incentive Refund Scheme for eligible employers with respect to the administrative charges that are deposited for providing a Universal Account Number (UAN) to all employees. The Incentive Refund Scheme shall be in operation for one year with effect from 1st January, 2016 to 31st December, 2016 (i.e. for the quarters beginning from January 2016).
S.No Scheme Incentive Eligibility: The employer will be eligible to claim the deduction once he/she furnishes the following details. 1. Incentive Refund Scheme A 10% refund of the administrative charges of quarterly remittance- (i) Providing members’ details as required under Form No. 11 (New) (80 % or above)
- (ii) Furnishing the following details:
- 1) AADHAR (at least 80% of (i) above)
- 2) Bank a/c no. (100 % (i) above)
- 3) PAN (wherever applicable)
- (iii) UAN activation (100% of (i) above)
- (i) Providing members’ details as required in Form No. 11 (New) (60% or above);
- (ii) Furnishing the following details
- 1) AADHAR (70% of (i) above)
- 2) Bank A/c No. (80% of (i) above)
- 3) PAN (wherever applicable);
Government vide notification dated 19th February, 2016 included the Atal Pension Yojana under the notified pension schemes, which can be claimed as deduction under section 80CCD. Therefore, any individual who invests in the Atal Pension Yojana scheme scan claim the same as deduction from taxable income.
Employee Provident Fund Organization (EPFO) increases the interest rate to 8.8%EPFO has announced an increase in the PF interest rate from 8.75% to 8.80%. In this financial year (2015-2016), the subscribers of EPFO will get a return marginally higher than they have in the past two years, when the interest rate was 8.75%.
Central Government proposes the simplification of labor lawsThe Central Government is in the process of simplifying labor laws by consolidating the existing 44 laws into four labor codes such as wages, industrial relations, safety and security, and health. This simplification could considerably increase the ease with which business is conducted thus creating jobs without compromising on the genuine protection and rights that are available for workers.
A Shram Suvidha portal has been created for online services related to the 16 labor laws including administering a process of transparent and random inspection of businesses. A LIN number has been issued to over one million employers, which will enable them to process single online filings for eight labor laws. The link to the portal is https://www.efilelabourreturn.gov.in/home
Bonus Act Amendment’s retrospective operation stayed in more statesAn order was passed by the Kerala High Court in January 2016 stating that the Bonus Amendment, to the extent that it gives retrospective effect from 1st April 2014, is stayed. This amendment will be implemented from FY 2015-16 pending the disposal of the writ petition. After Kerala HC, the Madhya Pradesh Labor office, Karnataka High Court, and Madras High Court have passed similar orders.
Government proposes to form separate National Social Security AuthorityThe Government proposes the formation of a National Social Security Authority, chaired by Prime Minister Narendra Modi, and a separate Social Security Department within the ministry to provide social security to the entire population. The authority may have all the ministers, secretaries of all ministries, and also state government officials as members.
The functions of the authority will mainly be to formulate the national policy on social security. The other functions will be to co-ordinate the central and state level programs and to ensure that the objectives of the policy are achieved within the prescribed time frame.
The proposal is to form a four-tier system to cover the entire population of the country, including both formal and informal sector workers, through a common Social Security code.
- 1st tier: Destitute and people below the poverty line
- 2nd tier: Unorganized sector who may be covered under a subsidized scheme
- 3rd tier: Workers who can, with the help of employer, contribute to the schemes
- 4th tier: People who are comparatively affluent and can make their own provisions for meeting contingencies or risks as and when they arise
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