TDS Payment on Superannuation Fund and Provident Fund w.e.f. 01.06.2015

TDS ON PAYMENT OF ACCUMULATED BALANCE UNDER RECOGNISED PROVIDENT FUND AND CONTRIBUTION FROM APPROVED SUPERANNUATION FUND

The trustees of a Recognized Provident Fund, or any person authorized by the regulations of the Fund to make payment of accumulated balances due to employees, shall in cases where sub-rule(1) of Rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an employee is paid, make therefrom the deduction specified in Rule 10 of Part A of the Fourth Schedule to the Act.

The accumulated balance is treated as income chargeable under the head “Salaries”.

Where any contribution made by an employer, including interest on such contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on the amount so paid shall be deducted by the trustees of the Fund to the extent provided in Rule 6 of Part B of the Fourth Schedule to the Act. TDS should be at the average rate of tax at which, the employee was liable to be taxed during the preceding three years or during the period, if that period is less than three years, when he was member of the fund.

The deductor shall remain liable to deduct tax on any sum paid on account of returned contributions (including interest, if any) even if a fund or part of a fund ceases to be an approved Superannuation fund.

As per section 192A of the Act, w. e. f. 01.06.2015 the trustees of the EPF Scheme 1952 framed under section 5 of the EPF & Misc.

Provisions Act, 1952 or any person authorized under the scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognized provident fund is includible in his total income owing to the provisions of Rule 8 of Part A of Fourth Schedule not being applicable at the time of payment of accumulated balance due to the employee, deduct income tax thereon @ 10% if the amount of such payment or aggregate of such payment exceeds Rs 50,000/-. In case the employee does not provide his/her PAN No., then the deduction will have to be made at maximum marginal rate.

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Important message for employees retiring within the next three months

PRE - RETIREMENT COUNSELLING WORKSHOP

Important message for employees retiring within the next three months

The Department of Pension and Pensioners Welfare is organizing a Pre-retirement counselling workshop on 25th, November, 2014 from 2.00 PM to 5.00 PM in the Conference Room of Department of Administrative Reforms, 5th Floor, Sardar Patel Bhawan, New Delhi.

The employees of Government of India retiring in the next 6 months are hereby informed that they may attend the workshop. Confirmation with Name, Ministry & Phone No. may be sent at the email address mkumar.mol@nic.in

sd/-

US (Sankalp)

Department of Pension & Pensioners' Welfare

Download Important Message for Employees (Click Here)

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Superannuation fund isn't a taxable until employee is entitled to receive it. - AAR

IT/ILT/AAA: Employer's contribution to the superannuation fund assures only future benefit to employees and they do not get any vested right at the time of making contribution to the fund - Therefore, such contribution could not be treated as taxable perquisite in the hands employee until they are entitled to receive it

Facts:

•            The Royal Bank of Scotland ('Applicant') was established in Netherlands. Its Indian branch established a superannuation fund for providing pension to its eligible employees under a 'Defined Benefit Plan'.
•            The applicant seeks Advance Ruling on the issue whether tax was to be deducted under Sec. 192 on the contribution made to the superannuation fund (for an amount exceeding Rs. 1,00,000 per employee) as perquisite?
•            The Revenue contended that as per section 17(2)(vii), any contribution made by employer to the superannuation fund in excess of Rs. 1,00,000 to be treated as perquisite in the hands of an employee. Hence, the applicant was liable to deduct tax at source under section 192.

The Authority held in favour of applicant as under:

1.            The AS-15 defines 'Defined Benefit Plan' as a plan in which amount contributed was invested to earn some return to ensure that employees would get pension as per the pre-defined formula.
2.            Employer's contribution to the superannuation fund assures only future benefit to employees and they didn't get any vested right at the time of making contribution to the fund. Thus, such contribution could not be treated as taxable perquisite in the hands employee until he was entitled to receive it
3.            Mere insertion of a Sec. 17(2)(vii) didn't make any significant departure from this aspect. Thus, applicant wasn't required to deduct tax at source on contribution made to superannuation fund.

Source: www.taxmann.com

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Voluntary Retirement under Fundamental Rule 56(k), 56(m) and Rule 48 - Amendment orders by Dopt

Voluntary Retirement under Fundamental Rule 56(k), 56(m) and Rule 48  - Amendment orders by Dopt

Government of India

Ministry of Personnel, Public Grievances and Pensions

Department of Personnel and Training

North Block, New Delhi-100 001

Dated : 27th February, 2014

Subject : Voluntary retirement under FR 56(k), etc. and amendment of Rules.

The provisions of Fundamental Rule 56(k), 56(m) and Rule 48 of CCS(Pension) Rules, 1972 relating to acceptance of request of voluntary retirement have been revisited as per the Central Administrative Tribunal, Principal Bench judgement dated 4th August, 2010 in 0.A.No.1600/2009 filed by Shri Gopal Singh Purohit Vs UOI & Others to bring them at par with each other.

2. The matter has ‘been examined in consultation with Department of Pension and Pensioners Welfare and the Ministry of Law. FR 56(k) and 56 (m) have been amended vide Extra Ordinary Gazette Notification No.GSR.27(E) dated 17 th January, 2014. It shall be open to the appropriate authority to withhold permission to a Government servant who seeks to retire under FR 56(k) or 56 (m) in the following circumstances:

    (i) If the Government servant is under suspension ; or

    (ii) If a charge sheet has been issued and the disciplinary proceedings are pending; or

    (iii) If judicial proceedings on charges which may amount to grave misconduct, are pending.

Explanation: For the purpose of this clause, judicial proceedings shall be deemed to be pending, if a complaint or report of a police officer, of which the Magistrate takes cognizance, has been made or filed in a criminal proceedings.

3. Copy of the Gazette Notification No.G.S.R.E.(27) dated 17.1.2014 amending FR 56(k) and FR 56(m) is enclosed.

4. All Ministries/Departments are requested to bring the contents of this O.M. to the notice of all concerned.

MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS

(Department of Personnel and Training )

NOTIFICATION

New Delhi, the 17th January, 2014

GS.R. – 27(E) In exercise of the powers conferred by the proviso to article 309 of the Constitution, and in consultation with the Comptroller and Auditor General in relation to persons serving in the Indian Audit and Accounts Department, the President hereby makes the following rule further to amend the Fundamental Rules, 1922, namely :-

I. (1) These rules may be called the Fundamental (First Amendment) Rules, 2014.

(2) They shall came into force on the date of their publication in the Official Gazette.

2. In the Fundamental Rule, 1922, in rule 56, –

(a) in clause (k), in sub-clause ( I), for item (c), the following, shall be substituted namely :-

"(c) it shall be open to the Appropriate Authority to withhold permission to a Government servant, who seeks to retire under this clause, if,-

    (i) the Government servant is under suspension: or

    (ii) a charge sheet has been issued and the disciplinary proceedings are pending; or

    (iii) if judicial proceedings on charges which may amount to grave misconduct, are pending.

Explanation :- For the purpose of this clause, judicial proceedings shall be deemed to be pending, if a complaint or report of a police officer, of which the Magistrate takes cognizance, has been made or filed in a criminal proceedings.";

(b) for clause (m), the following shall be substituted, namely : –

"(m)A Government servant in Group ‘C’ post who is not governed by any pension rules, may, by giving notice of not less than three months in writing to the Appropriate Authority, retire from service after he has completed thirty years service :

Provided that it shall be open to the Appropriate Authority to withhold permission to a Government servant, who seeks to retire proceedings."

    (i) the Government servant is under suspension: or

    (ii) a charge sheet has been issued and the disciplinary proceedings are pending; or

    (iii) if judicial proceedings on charges which may amount to grave misconduct, are pending.

Explanation :- For the purpose of this clause, judicial proceedings shall be deemed to be pending, if a complaint or report of a police officer, of which the Magistrate takes cognizance, has been made or filed in a criminal proceedings.";

[No.25013/3/2010-Estt. (A-IV)]

MAMTA KUNDR A, Jt. Secy.

Source : www.persmin.gov.in

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TDS on Provident Fund and Superannuation Fund for Asstt. Year 2014-15

The trustees of a Recognized Provident Fund, or any person authorized by the regulations of the Fund to make payment of accumulated balances due to employees, shall in cases where sub-rule(1) of Rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an employee is paid, make therefrom the deduction specified in Rule 10 of Part A of the Fourth Schedule to the Act. The accumulated balance is treated as income chargeable under the head “Salaries”.

Where any contribution made by an employer, including interest on such contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on the amount so paid shall be deducted by the trustees of the Fund to the extent provided in Rule 6 of Part B of the Fourth Schedule to the Act. TDS should be at the average rate of tax at which, the employee was liable to be taxed during the preceding three years or during the period, if that period is less than three years, when he was member of the fund.

The deductor shall remain liable to deduct tax on any sum paid on account of returned contributions (including interest, if any) even if a fund or part of a fund ceases to be an approved Superannuation fund.

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Tax Liability on Retirement/Superannuation i.e. Leave Encashment & Other amount.

I would like to share important information regarding tax liability on amount received after retirement/superannuation i.e. leave encashment and other.   Let us have a look at the basic provision related to taxability of leave salary. Leave salary, also known as leave encashment, means that employee will receive the cash for leaves which are not taken by the employees. The leave encashment received during the service period is taxable for all the employees as per the income tax slab applicable to the employee. However, the tax treatment is different for the leave encashment received at the time of retirement/ superannuation. Further, the tax treatment is different for Government employee (Central or State) vis a vis  Non –Government employee as under:  

In the case of Central/ State Government employee, any amount received as cash equivalent of leave salary in respect of period of earned leave at his credit at the time of retirement/ superannuation is fully exempt from tax u/s 10(10AA)(i). 

In the case of Non-Government employee (i.e., the employee other than an employee of the Central Government or a State Government) leave salary is exempt from the tax u/s 10(10AA) (ii) to the extent of the least of the following:

• Cash equivalent of the leave salary in respect of the period of earned leave to the credit of an employee only at the time of retirement whether on superannuation or otherwise (earned leave entitlement cannot exceed 30 days for every year of actual service rendered for the employer from whose service he has retired): or
• 10 month “Average Salary” or
• The amount not chargeable to tax as specified by the Government. (Presently, Rs. 3 Lacs has been specified).
• Leave encashment actually received at the time of retirement.
  
  

Average salary, as mentioned above, is to be calculated on the basis of average salary during the period of 10 months immediately preceding the retirement/ superannuation.

        ”Salary” here means basic salary & includes dearness allowances if term of employment so provided. It also includes commission based on a fixed percentage of turnover achieved by an employee as per term of contract of employment but excludes all other allowances & perquisites.

Now, with above basic brief up about taxability of leave salary, the opinions on the issue raised in your queries are as under:

1. Leave salary received at the time of retirement is exempt only in the hands of State or Central Government employee. It will not be exempt in the hands of the employee of PSU or Local Authorities. The definition of “Government Employee” is not specifically given in the Income Tax Act-1961. However, the Act has specifically incorporated the PSU employees, Government undertaking employee, Local Authorities employees etc in various other Sections / clauses in the Income Tax Act-1961 where the benefit is meant to be conferred to them. The same is not there in Section 10(10AA).
2. The Leave Salary is taxable under the head “Income from Salary”. The Salary Income is taxable in the year in which it has accrued or in the year in which it is received, whichever is earlier. Accordingly, the leave encasement is taxable as income of the FY 2012-13 and not FY 2013-14.

TAXABILITY OF LEAVE SALARY AT A GLANCE:

S.No.	Particulars	Tax Treatment
A]	Encasement of leave during service	It is charged to tax.
B]	Encasement of leave at the time of retirement
	1. If Central or State Government Employees	Fully exempt from tax u/s 10(10AA)(i)
	2. For any other employees	Lease of the following is exempt: 1. Earned leave months x Average salary 2. Avg. monthly salary x 10 3. Maximum amount Rs. 3,00,000/- 4. Actually received

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Tax Liability and Exmptions after retirement/superannuation.

On the matter of tax exemption or liability after retirement / superannuation let us have a look at the basic provision related to tax-ability of leave salary.  Leave salary, also known as leave encashment, means that employee will receive the cash for leaves which are not taken by the employees. The leave encashment received during the service period is taxable for all the employees as per the income tax slab applicable to the employee. However, the tax treatment is different for the leave encashment received at the time of retirement/ superannuation. Further, the tax treatment is different for Government employee (Central or State) vis a vis  Non –Government employee as under:  

·    In the case of Central/ State Government employee, any amount received as cash equivalent of leave salary in respect of period of earned leave at his credit at the time of retirement/ superannuation is fully exempt from tax u/s 10(10AA)(i). 

·    In the case of Non-Government employee (i.e., the employee other than an employee of the Central Government or a State Government) leave salary is exempt from the tax u/s 10(10AA) (ii) to the extent of the least of the following:

1.      Cash equivalent of the leave salary in respect of the period of earned leave to the credit of an employee only at the time of retirement whether on superannuation or otherwise (earned leave entitlement cannot exceed 30 days for every year of actual service rendered for the employer from whose service he has retired): or 
2.       10 month “Average Salary” or
3.       The amount not chargeable to tax as specified by the Government. (Presently, Rs. 3 Lacs has been specified).
4.       Leave encashment actually received at the time of retirement.

Average salary, as mentioned above, is to be calculated on the basis of average salary during the period of 10 months immediately preceding the retirement/ superannuation.
”Salary” here means basic salary & includes dearness allowances if term of employment so provided. It also includes commission based on a fixed percentage of turnover achieved by an employee as per term of contract of employment but excludes all other allowances & perquisites.

Now, with above basic brief up about taxability of leave salary, the opinions on the issue raised in your queries are as under:

1.     Leave salary received at the time of retirement is exempt only in the hands of State or Central Government employee. It will not be exempt in the hands of the employee of PSU or Local Authorities. The definition of “Government Employee” is not specifically given in the Income Tax Act-1961. However, the Act has specifically incorporated the PSU employees, Government undertaking employee, Local Authorities employees etc in various other Sections / clauses in the Income Tax Act-1961 where the benefit is meant to be conferred to them. The same is not there in Section 10(10AA).

2.     The Leave Salary is taxable under the head “Income from Salary”. The Salary Income is taxable in the year in which it has accrued or in the year in which it is received, whichever is earlier. Accordingly, the leave encashment is taxable as income of the FY 2012-13 and not FY 2013-14.

TAXABILITY OF LEAVE SALARY AT A GLANCE:

S.No.	Particulars	Tax Treatment
A]	Encashment of leave during service	It is charged to tax.
B]	Encashment of leave at the time of retirement
	1. If Central or State Government Employees	Fully exempt from tax u/s 10(10AA)(i)
	2. For any other employees	Lease of the following is exempt: 1. Earned leave months x Average salary 2. Avg. monthly salary x 10 3. Maximum amount Rs. 3,00,000/- 4. Actually received

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Senior Citizen Saving Scheme have any Extension for Deduction u/s. 80C.

It is general demand that regarding the transfer of money by cheque to HUF account as an unsecured Loans. In turn, the HUF account invests it in fixed deposit. What is the income tax liability in such transaction?

If any member of the HUF transfer his own assets to HUF without consideration (i.e., throw his assets to the common hotchpotch), income from such assets would be taxable in the hands of individual transferring the assets and not in the hands of HUF [Section 64(2)].

If you give interest bearing loans to your HUF, Income earned by the HUF out of the funds so advanced will be taxable as income of the HUF only and will not attract the clubbing provision of section 64(2).

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Detailed information about Renewal/Updation of Digital Signature Certificate (DSC)

When DSC of organization expires or organization want to change the DSC, then organization is required to put up a request for renewal or updation of DSC with NSDL. The following documents are requisite for renewal / updation of Digital Signature Certificate (DSC):

1. Authority Letter
2. Cover Letter
3. Screen Shots of new DSC*

*Note - Go to Internet explorer - Tools - Internet Options - Contents - Certificates - Personal Tab (and view certificate) then take below screen shots.

1. General Tab
2. Details Tab - Serial Number
3. Details Tab - Authority Key Identifier

The documents should be forwarded to NSDL at the following address:

Online Upload Team

National Securities Depository Limited

1st floor, Times Tower,

Kamala Mills Compound,

Senapati Bapat Marg,

Lower Parel (W),

Mumbai - 400013.

Superscribe the envelope with 'Renewal / Updation of Digital Signature Certificate (DSC) for Online upload’.

Note :-
As per the guidelines issued by the Office of CCA, it is required to comply to the use of SHA-2 Hash Algorithm and 2048 bit RSA keys for digital signing. In view of the same, the following pre-requisites need to be followed:

• JRE version : SUN-java 1.6_update29 or higher version (32 bit)
• Client Operating system : Windows XP SP3, Vista Windows 7, Windows 2003 with patch for SHA-2.
• I.E browser version supported : 7,8 and 9.
• Safenet or E-token drivers used should be the latest (if applicable)

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Superannuation, Re-employment, Pension, Provident Fund and Gratuity

Existing Scenario: Once a teacher, always a teacher is a very popular saying. However, issues relating to the age of superannuation of teachers, post-retirement benefit of Pension and terminal benefits like Provident Fund and Gratuity have always been matters of concern for them since these relate to social security available to them once they have finished their teaching careers. The Pay Review Committee during its interaction with teachers and also after scrutinizing the data made available to it through responses to its questionnaires and also through the written representations made to it noted with grave concern that there was no uniformity in the availability of such benefits to university and college teachers across the country. Even with respect to a significant issue like the age of superannuation, the span is from fifty five to sixty five with fifty eight, sixty, sixty two as terminal stages in between. Similarly, there are teachers who enjoy the benefits of post-retirement pension while others have no such support. In some institutions the provision of general provident fund is available for a section of in-service teachers while others even in the same institution are governed by the Contributory Provident Fund Scheme.

Keeping all this in mind and being aware of the fact that issues of social security will go a long way in attracting fresh talent to teaching in colleges and universities, the Pay Review Committee makes the following recommendations.

The age of Superannuation: Keeping in mind the fact that the field of higher education is currently facing an acute shortage of teachers at all levels and also being aware of the decision of the central government to expand the base of college and university education significantly throughout the country during the XI Five Year Plan which has been declared as the Plan for Education, The Pay Review Committee recommends that the age of superannuation of teachers should be 65 years throughout the country whether working in a State or Central University as also whether in a college or in a university.

The Pay Review Committee also believes that the fears expressed by certain quarters that raising the age of superannuation to sixty five years would have an adverse impact on the recruitment of young teachers at the entry level is both misconstrued and misplaced. According to the understanding of the Pay Review Committee, the demand and supply situation of teachers for higher education is such that even after this provision of sixty five years as the age of superannuation of teachers is put in place, there would still be a significant shortfall in the availability of qualified teachers. Moreover, the academic institutions will continue to derive the benefits of availability of senior academics both in teaching and research. This would indeed be a big factor towards the improvement in quality of teaching and research. The Pay Review Committee is of the considered opinion that while allowing the institutions to continue to derive the benefits of participation by senior academics in both teaching and research; it will also attract talented young academics to the profession.

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