In a bid to protect tax benefits for subscribers of about 180 private provident fund trusts, retirement fund body EPFO has called a meeting of an empowered committee on Friday to grant them regular tax exemption.
The meeting has been called as the Finance Minister P Chidambaram did not extend a March 31 deadline for the trusts to get regular tax exemption through the Employees’ Provident Fund Organisation (EPFO).
Mr. Chidambaram made it mandatory in 2006 for these trusts to procure an exemption certificate by March 31, 2007, a deadline that has been extended and is now set to expire on March 31.
“We have called the first meeting of an empowered committee, for granting regular tax exemption to private PF trusts,” EPFO Central PF Commissioner K K Jalan said.
Regular tax exemption is granted by the EPFO’s apex decision-making body, the Central Board of Trustees, headed by the Labour Minister. However, the power to grant exemption was delegated to the committee by the trustees on January 13.
According to a senior official, there are around 180 such applications, which are being processed by the EPFO at present.
The official expressed the hope that 40-50 such cases which have fulfilled all requirements for the purpose can get regular tax exemption in the Friday meeting of the committee headed by the Central Provident Fund Commissioner.
Private PF trusts are formed by firms that manage the money and accounts of their workers themselves and have exemption from filing PF returns. The members of these trusts enjoy income tax and other benefits at par with EPFO subscribers.
Such trusts can start functioning after seeking ad hoc tax exemption from the regional commissioner after which they apply for regular tax exemption.
Once approved, a PF trust’s regular tax exemption is notified by the Labour Ministry or state government.
However EPFO has expedited the process of granting tax exemption to trusts, some EPFO officials hope that the deadline will be extended in the full-fledged budget to be presented by the next government after the general elections as done in the 2009.