Retirement fund body EPFO is likely to retain 8.8 per cent rate of interest on EPF deposits for the current fiscal for its over four crore subscribers -- same as 2015-16 -- at its trustees meeting tomorrow.
"The Employees Provident Fund Organisation's apex decision making body, the Central Board of Trustees (CBT), may decide to retain 8.8 per cent rate of interest on EPF for the current fiscal tomorrow in its meeting in Bangalore," said a source.
"Although providing 8.8 per cent rate of interest for the current fiscal will leave a deficit of Rs 383 crore, the body wants to utilise about Rs 409 crore surplus with it, which accrued after providing 8.8 per cent rate of interest for 2015-16," the source added.
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He further said: "Labour Ministry top brass has been pursuing Finance Ministry higher ups to convince them for retaining 8.8 per cent rate for this fiscal to avoid any embarrassment."
The Finance Ministry had earlier this year decided to lower interest on EFF for 2015-16 to 8.7 per cent from the 8.8 per cent approved by the CBT headed the Labour Minister.
The government had to roll back the decision and provide 8.8 per cent rate of interest on EPF deposit for 2015-16 following protests by trade unions.
As per the EPFO income projections of Rs 39,084 crore for the current fiscal, providing 8.8 per cent rate of interest on EPF deposits will leave a deficit of Rs 383 crore. There would be a surplus of about Rs 69.34 crore if interest rate is lowered to 8.7 per cent.
The source said the Finance Ministry has been asking the Labour Ministry to align the EPF interest rate with other small saving schemes of the government like Public Provident Fund (PPF).
In September, the government reduced interest rates on small savings schemes marginally by 0.1 per cent for the October-December quarter of 2016-17, which resulted in lower returns on PPF, Kisan Vikas Patra, Sukanya Samriddhi Account, among others.
The Labour Ministry however wants to retain 8.8 per cent for the current fiscal as well, said the source.
The EPFO trustees will also consider a proposal to reduce the administrative charges to 0.65 per cent of total wage on which contributions are payable from 0.85 per cent at present. This will result in total annual savings of Rs 1,000 crore for around six lakh employers covered by the EPFO.
The trustee will also consider the proposal to abolish administrative charges on firms to fund expenditure in implementing the Employees' Deposit Linked Insurance Scheme (EDLI), 1976.
The agenda says that this could be seen as an attempt to promote the "Ease Of Doing Business in India" and to make Indian business more competitive.
It said that all administrative expenses of EDLI may be met from interest of EDLI corpus.
The administrative charges to run EDLI scheme is 0.01 per cent while inspection charges is 0.005 per cent for firms, which subscribes to insurance schemes in lieu of EDLI Scheme.
The total corpus in EDLI administration account as on March 31, 2016 is Rs 2,372.83 crore. The interest generated on such a corpus would be around Rs 17.5 crore annually.
PMGKY was announced following the government decision to
scrap Rs 500 and Rs 1,000 notes in a bid to flush out cash earned through illegal activities or earned legally but never disclosed.
Offering tax dodgers confidentially and immunity from prosecution, PMGKY commenced on December 17, 2016 and will remain open up to March 31.
Not declaring black money under the scheme now but showing it as income in the tax return form would lead to a total levy of 77.25 per cent in taxes and penalty. In case the disclosure is not made either using the scheme or in return, a further 10 per cent penalty on tax will be levied followed by prosecution.
The disclosure scheme is part of The Taxation Laws (Second Amendment) Act, 2016, which was approved by the Lok Sabha in November 30 and received President assent last month.
"Undisclosed deposits between April 1, 2016 to December 15, 2016 shall also attract tax at the rate provided in the Taxation Laws (Second Amendment) Act, 2016," the FAQ said.
Also, the amount deposited or repaid against an overdraft account/cash credit account or any loan account maintained with a bank or any specified entity is eligible for being declared under the Scheme.
On cash seized during a search and seizure action, CBDT said: "The adjustment of cash seized by the Department and deposited in the Public Deposit Account may be allowed to be adjusted for making payment of tax, surcharge and penalty under the Scheme on the request of the person from whom the cash is seized.
"However, the said amount shall not be allowed to be adjusted for making deposit under the Pradhan Mantri Garib Kalyan Deposit Scheme."
In case of an advance in cash for procurement of goods (other than immovable property) is returned, the same can be declared under the Scheme.
"Since the advance was made for procurement of goods (other than immovable property) or services, no penalty... shall be attracted in respect of the said transactions," it added.
