An empowered committee of the retirement fund body EPFO has approved granting regular tax exemption to 20 private provident fund trusts, which would provide tax benefits for subscribers of these firms.
The firms who got approval for tax exemption during the meeting of the panel held on May 15, include big names like Food Corporation of India, J K Tyre and Industries (Vikrant Tyre Plant), Mercedes Benz Research and Development, Aditya Birla Nuvo, L&T Technology services and L&T Hydrocarbon.
The meeting of the panel is being called as outgoing Finance Minister P Chidambaram did not extend a March 31 deadline for the trusts to get regular tax exemption through the Employees' Provident Fund Organisation (EPFO).
Chidambaram made it mandatory in 2006 for these trusts to procure an exemption certificate by March 31, 2007, a deadline that has been extended many times and expired on March 31.
Earlier during the first meeting of the committee held on March 28, it had approved 68 such applications.
The panel has been empowered by the EPFO's apex decision making body Central Board of Trustees (CBT), headed by the Labour Minister, to grant regular exemption on January 13 in its meeting. The power to grant exemption is vested in CBT.
"EPFO is still processing 148 such applications for grant of regular tax exemption," EPFO's Central PF Commissioner K K Jalan who heads the panel, told PTI.
Asked whether more such applications are expected, he replied, "We may receive such applications in future."
Private PF trusts are formed by firms that manage the money and accounts of their workers themselves and have exemption from filing PF returns. The members of these trusts enjoy tax and other benefits at par with EPFO subscribers.
Such trusts can start functioning after seeking ad hoc tax exemption from the regional commissioner after which they apply for regular tax exemption.
Once approved, a PF trust's regular tax exemption is notified by the Labour Ministry or state government.
According to a senior official, if the deadline for getting regular tax exemption is not extended in the full-fledged budget to be presented by the new government then the defaulting trusts would come under the income tax net.
He expressed hope that the next meeting of panel may be called in the second week of next month where 30-40 such applications could be approved.
At present, the EPF subscribers are exempted from paying income tax on deposits, accrual of interest and withdrawal of their funds.
Source : www.economictimes.indiatimes.com
