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Maternity Benefit (Amendment) Act 2017 (Clarifications)

Maternity Benefit Act 2017 was passed in March 2017 and all the provisions introduced were applicable from April 2017. The major changes brought in by April 2017 were: -->

  1. Extension of maternity benefit period to 26 weeks (from 12 weeks )
  2. Extending the maternity benefit provision towards adopting as well as commissioning mothers.

Whereas there are few changes and provision which are applicable from 1st July 2017. The said changes are:

  1. Allowing pregnant women to work from home (Pre and post maternity benefit period. This facility needs to be decided by employee as well as employer unanimously)
  2. Providing creche services near the office place where in an organization there are 50 and more employees employed any day of the year.

There are a few more clarifications which were received from the department regarding the implication of Maternity Benefit Act. The clarifications are as below:

  1. Women who are already under maternity leave at the time of enforcement of this new provision (i.e. 1st April 2017), may request for the extension of maternity benefit leave up to 26 weeks. Note: Whether the extension is to be given or not must be mutually decided by the employer and employee.
  2. Women who have already availed the maternity leave benefit at the time of enforcement of this new provision (i.e. on 1st April 2017), will not be eligible for claiming any extension of the maternity benefit period.

To read more please refer the link.

Draft rules for: Labour Code on Social Security & Welfare

Last year in 2016, there was proposition made to consolidate 44 Central Labour Laws in India and many other State Laws attached to these Central Laws under four labour law codes –

  • 1. Code on Wages
  • 2. Code on Industrial Relations
  • 3. Code on Social Security & Welfarex
  • 4. Code on Occupational Safety, Health & Working Conditions.

In line with the proposed amendment to be made for simplification, amalgamation and rationalization of Central Labour Laws, Ministry has prepared a Preliminary draft of the Code on Social Security & Welfare by consolidating all existing Labour Laws related to Social Security (total 15 Labour Laws including EPF Act, ESI Act, Maternity Benefit Act, Payment of Gratuity Act, Employees Compensation Act, Unorganised Social Security Act, and various Welfare Cess /Fund Acts).

Note: public are invited to comment and provide their view on this draft within one month time.

The below are prominent features of the new draft bill for Labour Code of Social Security and Welfare:

  • This new code will provide social security cover to the entire workforce in the country, including self-employed and agricultural workers irrespective of whether the employee belongs to the organized sector or the un-organized sector. Even households employing domestic help will be able to make contributions towards schemes including provident fund and gratuity for the worker. Factories employing even a single worker will have to contribute towards social security.
  • A National Social Security Council would be formed to streamline and make policy on Social Security Schemes related to all the Ministries. The Council would be chaired by the Prime Minister of India. Whereas other members would include: Finance Minister, Labour Minister, Health and Family Welfare Minister along with employer and employees’ representatives. The Council will co-ordinate between Central and State Governments, monitor the implementation of social security schemes, regulate funds collected under various social security schemes, among others.
  • The proposed code seeks to cover “any factory, any mine, any plantation, any shop, charitable organizations” and all establishments or households employing casual, part-time, fixed-term, informal, apprentice, domestic and home-based workers.
  • Currently, employers contribute 31.5% of the workers’ income towards these schemes. Whereas as per the draft rule, it is proposed to cap the employer contribution under such scheme at 30% of the workers’ income.
  • Self-employed workers will contribute 20% of their monthly income towards provident fund, pension and other related schemes.
  • All the entities whether factories or households will have to register their workers through an Aadhaar-based registration system and self-employer workers will be required to register themselves.
  • Social Security Benefits unclaimed for five years after becoming due to the worker will be confiscated by the government.

To read further details of the draft rules please refer the link.

Withdrawal policy for International Workers under Provident Fund

The instructions outlined below have to be followed while making payment to the international worker at the time of leaving India:

  • Employer should make the payment of contribution through separate ECR within 3 days of the month in which the member is leaving the country;
  • Employer should submit the claim forms in respect of such international worker by 6th of the month in which such member is leaving service;
  • The Provident fund office will settle the account and credit the accumulated amount to the member’s account on the date of leaving service in India to the bank a/c maintained in India. (If the member desires interest on the settlement amount for the month of retirement, then the credit will happen on the first day of next month)
No income tax on salary deducted for not serving notice period

There has been long drawn debate going on whether to deduct income tax on the amount of salary deducted or reversed in the hands of employee (as penalty) due to the reason of not serving the notice period.

The N. Rebello vs Reliance Communications and Sistema Shyam case was registered under the Income-tax Appellate Tribunal (ITAT), Ahmedabad which seeked clarity on the said confusion.

After the discussion and court procedure Ahmedabad bench on April 18 passed an order which said: “only salary received would be taxable, and not portions which were deducted by a company for not serving out a notice period.” To read details of the case please refer the link.

True and fair rent receipt to be provided for HRA claim

House Rent Allowance (HRA) in many salary structure forms a major component by percentage of the total salary. In many instances, there have been attempts to evade tax by producing fake property rent receipts, often from parents and close relatives for claiming HRA deductions.

Mumbai Income Tax Appellate Tribunal (ITAT) has passed an order which states: “Any rent amount paid to close relatives, parents and spouse are to be denied as claim under house rent allowance (HRA) by a taxpayer.

In addition to the above recent tribunal ruling, the assessing officer can now demand proof — such as lease and rental agreement, letter to the housing co-operative society informing about the tenancy, electricity bill, water bill etc. while allowing a tax exemption.

Compliance Calendar for the month of May, 2017 Due date Nature of transaction Existing rules Mode Professional Tax - States - Remittances 10th May 17 Andhra Pradesh & Madhya Pradesh State-wise regulations By Challan 15th May 17 Gujarat Gujarat PT regulations By Challan 20th May 17 Karnataka Karnataka PT regulations By Challan & Online 21st May 17 West Bengal West Bengal PT regulations By Challan 30th May 17 Assam & Orissa State-wise regulations By Challan 30th May 17 Maharashtra Maharashtra PT regulations Online PF Central 15th May 17 Remittance of Contribution EPF & MP Act, 1952 Online ESI Central 21st May 17 Remittance of Contribution (Main code and Sub codes) ESIC Act, 1948 Online TDS 07th May 17 TDS Payment Income Tax Act, 1961 Online 31st May 17 Form 16 Income Tax Act, 1961 Online 31st May 17 TDS Retun Filing for Q4 of FY 2016-17 Income Tax Act, 1961 Online Labour Welfare Fund Remittances 5th May 17 Kerala State wise regulations By Challan
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