With a large number of employees facing threat of losing income tax waiver on retirement benefits, Union Budget 2013 has proposed to extend the deadline for seeking exemption certificate by private PF trusts by one year till March 31, 2014.
"With a view to provide further time to the EPFO to decide on the pending applications seeking exemption under section 17 of the Employees Provident Fund & Miscellaneous Provision Act, it is proposed to amend the first proviso, so as to extend the time limit from 31st March, 2013 to 31th March, 2014", said the memorandum explaining the provision of Finance Bill 2013.
"It has been noticed that a number of applications are yet to be processed by the Employees’ Provident Fund Organization (EPFO) for grant of exemption under section 17 of EPF & MP Act. This amendment will take effect retrospectively from 1st April, 2013", it said.
In 2006, Finance Minister P Chidambaram who was at helm of affairs, had made it mandatory for all private PF Trusts (PPFT) to seek exemption certificates either from the Labour Ministry or state Labour Department within a year for enjoying the tax benefits.
Since all these trusts could not get the exemption certificates in that
The firms operating in one state are required to seek exemption from that state's Labour Department and the entities having operations in more than one state are required to get the certificate from the Union Labour Ministry.
There are around 2,700 PPFTs out which majority of such trusts do not have the exemption certificate. Labour Ministry is processing around 200 application for issue of the exemption certificate, said an official.
In the absence of waiver, annual accretion to the PF is considered part of salary and is thus taxable. Secondly, income generated out of investment of the trust would attract tax. Moreover, deduction allowed to employers on contribution to the PF fund would also go, the official added.
