Unions against taxing savings schemes on withdrawal

The central trade unions would press for shelving a proposal that wants to tax withdrawals from savings schemes, including provident funds, at the pre-Budget meeting with Finance Minister Pranab Mukherjee on January 14.

“(The) Finance minister has invited trade unions for pre-Budget consultations on January 14,” All India Trade Union Congress Secretary D L Sachdev said.

Although the central trade unions are meeting here next week to prepare their charter of demands, Sachdev said: “We would definitely raise the issue of Exempt-Exempt-Tax (EET) mode for savings schemes.”

The draft Direct Taxes Code (DTC), on which the government has invited comments, proposed to tax all long-term savings schemes at the time of withdrawal by the subscribers.

At present, there are no taxes on long-term savings and pension schemes.

Besides the EET issue, Hind Mazdoor Sabha (HMS) Secretary A D Nagpal said: “We will also demand higher income tax slabs to provide relief to the working class.”

As part of the Budgetary exercise, the minister meets representatives of different interest groups like economists, industrialists, trade unions, et al, to get their views on the Budget.

The trade unions, Sachdev said, would also press for the creation of a National Security Fund for unorganised workers in the country.

In the view of unionists, the funds should have a corpus equal to 3 per cent of the gross domestic product for the welfare of these workers.

The other major issue which could rock the meeting is the proposal to impose service tax on contributions made to the Employees Provident Fund scheme, being run by the country’s largest retirement fund manager, the Employees’ Provident Fund Organisation (EPFO).

The issue came to light when, some months ago, the Central Board of Excise and Customs slapped a notice on EPFO for not paying service tax on the contributions to these scheme.