|
| Tata Sons seeks EPFO exemption |
| Neha Pandey / Mumbai Nov 06, 2009, 00:09 IST |
|
Tata Sons, the holding company of all the key companies within the Tata Group, has applied to the Employee Provident Fund Organisation (EPFO) to be exempted from the regulation of the Employee Provident Fund and Miscellaneous Provisions Act (EPF & MP Act), 1952.
Another group company, Tata Services, and a host of philanthropic trusts of the Group, like the Dorabji Tata Trust, Sir Ratan Tata Trust, Lady Tata Memorial Trust, and JN Tata Endowment for Higher Education of Indians, have also applied for this exemption. The move comes after four of its companies — Tata Group, Tata Consultancy Services, Tata Power and Tata Communication — have already been exempted from the EPF & MP Act. “All the key firms of the Tata Group will be out of the EPF & MP Act soon,” said a source.
Tata Sons’ senior vice-president (finance), F N Subedar, said: “Two years ago, the government said that companies which come under the IT Act needed to be exempted from the EPF & MP Act to continue their recognition under the Income Tax Act. Since Tata Sons and Tata Services were under the IT Act, we have applied for the exemption.” This move will impact 100 employees on Tata Sons’ rolls. Subedar said the other group companies would have their individual plans.
An exemption from EPFO regulations helps both employer and government. Though the government/EPFO continues to have a final say in the matter, it does not have to look into the day-to-day account transactions. Instead, an annual review is done. This helps in speedier paperwork and disbursements. With the provision of an exemption, an employer is encouraged to provide more benefits to employees.
According to the Act, an employer has to contribute a minimum of 12 per cent towards EPF on less than or up to Rs 6,500 pay (basic + dearness allowance or DA). Of this, 8.33 per cent should go towards the pension fund for the employee. The employer also has to invest these contributions by the investment pattern fixed by the government. Also, the minimum rate of interest that has to be paid on the contributions is 8.5 per cent. Companies which fulfil these criterion are eligible for an exemption.
A company EPF trust collects contributions from both employer and the employees. It has to maintain individual accounts and prepare statements, which are dispatched at the end of the year. The investments must follow government-prescribed norms and it must credit the 8.5 per cent interest earned on investments into individual accounts. It grants loans on EPF – home loans at 8.5 per cent and all other loans at 9.5 per cent.
Companies already exempted from EPFO regulations, sources say, pay 12 per cent towards EPF on the entire pay package and not on a minimum of Rs 6,500. This means these companies contribute much more than the government-stipulated amount towards EPF.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
