Experts CornerKhaitan & Co

Introduction

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) is a socio-beneficial welfare legislation intended to provide adequate social security to member employees in their old age and infirmity. The EPF Act is mandatorily applicable to every establishment employing 20 or more employees (covered establishment/employer) and the EPF Act and the Employees’ Provident Funds Scheme, 1952 (EPF Scheme), together envisage contributory provident fund (PF fund). The PF fund is regulated and managed by Employees’ Provident Fund Organisation (EPFO); a statutory body constituted by the Central Government.

 

The EPF Act and EPF Scheme encompass within their scope all the employees in a covered establishment that were previously members of the PF fund or new member employees drawing “monthly pay” (inclusive of basic wages, dearness allowance, retaining allowances and other ordinarily payable allowances) of up to INR 15,000 (eligible employees/employee). Under the scheme of law, all the eligible employees mandatorily contribute 12% of their “monthly pay”, and an equal contribution is compulsorily made by the covered establishments for all its eligible employees. While the entire contribution by the employee goes towards the PF fund, only 3.67% of the contributions by the covered establishment go towards the PF fund and the balance 8.33% of the said contribution goes to the employees’ pension fund.

 

The EPF Act is a unique substantive law, with a social welfare goal, providing within itself means and procedure for its enforcement. (Ref. Bank of India v. Provident Fund Commr.[1]) One such provision is Section 7-A of the EPF Act, which empowers the Provident Fund Commissioner (PF Commissioners), appointed by the EPFO, to initiate an inquiry for determination of any deficit in the contributions remitted by any establishment under the provisions of the EPF Act. Pertinently, neither the EPF Act nor any of its schemes have laid down any procedure for holding these inquiries. Accordingly, practically, the PF Commissioners are following different yardsticks for initiating inquiries under Section 7-A of the Act. As a matter of fact, in many cases, inquiries are being initiated for wholly insufficient and untenable grounds causing general resentment amongst the employers on the one hand and prolonged pendency of the inquiries on the other.

 

Considering the wide powers conferred on the PF Commissioners under this provision and the draconian financial and reputational impact the orders have on businesses of covered establishments and establishments exempted from the EPF Scheme, it has become imperative that there is some regulation of the inquiries so that establishments are not subjected to harassment of a fishing and roving inquiry.

Scope and Power of the PF Commissioners

Section 7-A of the EPF Act vests the PF Commissioner with powers similar to that of a civil court i.e. enforcement of the attendance of any person or examination of the person on oath, discovery and inspection of documents, receipt of evidence on affidavit, and issuance of commissions for the examination of the witness. The scope of this section is extensive to protect the interest of the employees in various instances. The PF Commissioners can initiate an inquiry into the matters including but not limited to:

(a) cases where a dispute arises regarding the applicability of the EPF Act to an establishment;

(b) cases involving the determination of the amount due from any covered establishment under the EPF Act, and the schemes framed thereunder;

(c) cases involving the determination of entitlement of an employee for the membership; and

(d) cases involving breach of any of the provisions of exempted provident fund trust.

 

Given the exercise of quasi-judicial powers by the PF Commissioners under Section 7-A of the EPF Act, the PF Commissioners are required to act reasonably, fairly and in accordance with the principles of natural justice while conducting an inquiry thereunder. However, in recent years, in the absence of any yardstick or statutorily mandated procedure to conduct such inquiries, there has been a sharp rise in fishing and roving inquiries by the PF Commissioners against covered establishments and also establishments exempted from the EPF Scheme which has consequently led to a sharp rise in litigation arising from the orders passed under Section 7-A of the EPF Act.

 

Set out below are some common instances of possible misuse and misapplication of the inquiry provisions under the EPF Act.

  • Initiation of inquiries without identification of beneficiaries

 

The avowed object of Section 7-A of the EPF Act is to ensure that the eligible employees are not deprived of their social security benefits. Thus, the contributions remitted under the EPF Act, or any dues recovered pursuant to any inquiry under Section 7-A thereof, is not for the benefit of the Central or the State Government; rather it is a collection for the benefit of the specific eligible employees. Given the same, it becomes imminent that the PF Commissioners necessarily identify the employees for whose benefit the dues are being assessed in an inquiry initiated against a covered establishment. A corollary to this is that unless the beneficiaries of the dues assessed by the PF authorities are identified, any amounts collected pursuant to a proceeding under Section 7-A would not benefit the eligible employees and therefore, fail to serve the purpose of the EPF Act.

 

In this background, the Supreme Court of India had opined in H.P. State Forest Corpn. v. Regl. Provident Fund Commr.[2], that amounts due from the employer will be determined only with respect to those employees who are identifiable and whose entitlement can be proved on evidence, and in the event the record is not available, it would not be obliged to explain its loss or any adverse inference on this score.

 

Similarly, the High Courts across the country have repeatedly held that the determination of employees’ provident fund dues without identification of beneficiaries by the authorities will not be tenable. In Regl. Provident Fund Commr. v. Faridabad Thermal Power Station[3], the Punjab and Haryana High Court has held that:

(a) An order passed under Section 7-A of the EPF Act is not sustainable if the employees’ provident fund contributions, etc. have been determined without identification of actual beneficiaries.

(b) In case the authority under Section 7-A of the EPF Act passes an order, determining the employees’ provident fund contributions to be remitted by the employer without identification of beneficiaries, it would not be appropriate.

(c) In case the authority under Section 7-A of the EPF Act fails to exercise the modes prescribed by law to identify the actual beneficiaries, it would be construed that the order passed is without application of mind and not sustainable.

To the same effect, in Provident Fund Commr. v. Nand Lal and Co.[4], a Division Bench of the Patna High Court held that assessment of the dues is payable under the EPF Act is for the benefit of the identified individuals. The court further held that assessment under Section 7-A of the EPF Act should not be confused with an assessment of tax. These are provident fund dues that are to accrue to an individual and not a tax, and not an amount payable to the PF Commissioner. Unless the nature of employment and the names of employees are identified with certainty, the assessment cannot be said to be in accordance with the law.

 

This position that there shall be no assessment without identifying the individual members in whose account the fund is to be credited has also been acknowledged by the Central Provident Fund Commissioner in its guideline/circular bearing Reference No. 7(1) 2012/RCs and Review Meeting/345 dated 30-11-2012 regarding “guidance of quasi-judicial proceedings under Section 7-A, ‘the determination of money due from employers’ of the Employees Provident Fund and Miscellaneous Provisions Act, 1952”.  Although the said guideline/circular has been kept in abeyance vide EPFO’s subsequent circular bearing number 7(1)2012/RCs Review Meeting/21224 dated 18-12-2012, the principle is well established and followed in general.

 

In view of the above, in the absence of the identification of beneficiaries, liability cannot be saddled upon an establishment in the name of compliance or enforcement of the law. The PF Commissioners have to mandatorily identify the actual beneficiaries before the assessment and collection of dues. However, despite this settled position of law, in most cases the PF Commissioners are conducting inquiries and compelling employers to pay dues for the faceless, nameless, or non-identifiable workers. Resultantly, in such cases, the amounts collected by the PF Commissioners never reach the beneficiaries concerned thereby frustrating the whole objective of Section 7-A of the EPF Act.

  • Conducting inquiries without application of mind

 

The inquiry proceeding before the PF Commissioners under Section 7-A of the EPF Act is a quasi-judicial proceeding and the fundamental principles of natural justice are intrinsic to such proceedings. A bare reference to Section 7-A of the EPF Act makes it clear that determination under the said section is a liability on the part of the covered establishment for which drastic action can be taken, like in a certificate proceeding. Hence, it is incumbent upon the PF Commissioners to exercise their powers independently, fairly and justly without being prejudiced by any submissions/contentions raised by the Provident Fund Inspectors (PF Inspectors) in their report. In Glamour v. Regl. Providend Fund Commr.[5], a Single Judge Bench of the Delhi High Court observed that the investigation made by the Inspector, or the report submitted by him was no substitute for quasi-judicial inquiry envisaged by Section 7-A. In an appeal filed against this case (Regl. Provident Fund Commr. v. Glamour Proprietor Seth Hassaram & Sons[6]), the Division Bench of the Delhi High Court confirmed the views of the Single Bench.

 

However, in practice, it is often seen that the PF Commissioners conduct inquiries in a preconceived and mechanical manner while ignoring submissions made by the covered establishment under inquiry, thereby disregarding the principles of natural justice. Such fishing and roving inquiries have also been acknowledged by the EPFO, which has time and again reiterated in its guidelines (ref. guideline/circular bearing Reference No. 7(1)2012/RCs Review Meeting dated 6-8-2014; guideline/circular bearing Reference No. /110001/4/3(71)MIS.C/2013/DI/Vol II/ dated 8-2-2016; and guideline/circular bearing Reference No. C-11/20/76/Misc./2020/CBE/TN/1027 dated 14-2-2020) that the existence of a prima face case is necessary before the initiation of inquiry under Section 7-A of the EPF Act. Notwithstanding the same, both at the stage of the initiation of an inquiry, as also at subsequent stages till the final assessment, the PF Commissioners have a tendency to mechanically refer and rely upon the report(s) submitted by the PF Inspectors rather than assess the existence of a prima facie case against the covered establishment and subsequently, the veracity of the allegations raised thereunder, causing severe hardship to the employers against whom such proceedings are initiated.

 

  • Initiation of inquiry for a bygone period

 

The EPF Act does not prescribe any period of limitation for initiation of inquiry under Section 7-A or a period within which the said inquiry is to be completed. Even though it is a well-settled position of law that when a statute does not prescribe a period of limitation, the authorities must take action within a reasonable period of time, there have been instances where Section 7-A inquiries have been initiated against the covered establishment for periods going as far as eight to fifteen years. While the EPFO also has issued clarification, vide its circular bearing Reference No. C-11/20/76/Misc./2020/CBE/TN/1027 dated 14-2-2020, that any initiation of proceedings for period beyond 5 years without evidence of such prolonged default would be legally untenable, the PF Commissioners continue to initiate inquiries against the employers for the bygone periods, without any evidence of the prolonged period of default.

 

In this context, it is pertinent to highlight that as per the provisions of the Companies Act, 2013, a company is required to maintain and preserve its books of accounts only for 8 years immediately preceding a financial year. In view of the same, when an inquiry is initiated for a period beyond 8 years, the covered establishment is unable to produce the relevant records and is invariably fastened with penal consequences on the ground of non-production of the documents. While this issue has been highlighted by the employers time and again, the same has been ignored by the PF Commissioners on the ground that EPF Act does not prescribe a period of limitation for initiating inquiries under Section 7-A of the Act.

 

On 29-9-2020, the Central Government enacted the Code on Social Security, 2020 (Code) to amend and consolidate the existing labour laws relating to the social security with the object of providing social security benefits to all the employees and workers irrespective of belonging to the organised and unorganised sectors. When enforced, the Code will repeal and re-enact 9 central labour legislations relating to the social security, including the EPF Act. The Code has introduced a statutory limitation period of 5 years for recovery for such proceedings, which is in consonance with the limitation period prescribed under Section 45-A of the Employees’ State Insurance Act, 1948. The introduction of a limitation period of 5 years for initiating an inquiry akin to the one under Section 7-A is surely a welcome move that will provide better clarity on the issue and huge relief to the employers.

 

  • Initiating inquiries against the principal employer when contractors have independent employees’ provident fund codes

Many employers outsource business processes of their establishment to contractors and engage workers in connection with the work of the establishment by or through contractors. As per the scheme of the EPF Act, the contractors are allotted an independent employees’ provident fund code (PF Code) and on allotment of the same are recognised as an “establishment” by the EPFO.

 

It is a settled position of law that contractors having separate PF Codes are independent employers and the establishment cannot be considered as principal employer for such contractors. Accordingly, if the relevant authorities seek details as to the payment of contributions or arrears payable by such contractors, the duty of the owner of the establishment is limited to only providing the list of contractors to the relevant authorities. This position has been set out in numerous cases including Food Corporation of India v. Provident Fund Commr.[7]Pardeep Kumar v. Presiding Officer[8]Group 4 Securitas Guarding Ltd. v. Employees Provident Fund Appellate Tribunal[9]Madurai District Central Cooperative Bank Ltd. v. Employees’ Provident Fund Organisation[10]Calcutta Constructions Co. v. Regl. Provident Fund Commr.[11]; and Regl. Provident Fund Commr. v. Ropar Thermal Plant[12]. In these cases, it has been held “with respect to the contractors, who are registered with the Provident Fund Department, having the independent code number, they are to be treated as independent employer”.

 

In view of the above settled position of law, the authorities cannot treat the employers (engaging such contractor’s workers) to be a “principal employer” for the purposes of the contractors having an independent PF Code or be held liable for purported non-payment of dues under the EPF Act. It is also practically not possible nor feasible for the establishment to keep track of all the personnel deputed to work by a contractor engaged. Further, such deployment of personnel by a contractor is subject to constant change and the discretion of contractor. In general practice, a principal employer has neither any knowledge nor any records of the actual number of workmen/contract labours deployed by such individual contractors for rendering the services or executing the work in terms of the work order. For instance, the principal employer may require certain work to be completed, in a certain manner and by a certain time. In such a scenario, the number of personnel deputed and selection of personnel would be at the discretion of the contractor and the principal employer for whose benefit the work is being carried out cannot reasonably be expected to make employees’ provident fund contributions on their behalf.

 

However, despite this settled position of law, it is generally seen that when the contractors default in depositing the contribution of their workmen or delay in depositing the same, the authorities initiate inquiry against the employer (and not the contractor) and fasten liability by treating them as the principal employer. In fact, it is in line with this practice that the EPFO has recently, vide its circular bearing Reference No. C-I/3(28) 2016/7A&14B/Pt./7212 and dated 27-4-2022, issued a “standard draft informed letter instructing the principal employer to declare the contractors on the EPFO’s unified portal for employees” wherein the EPFO has observed that even if contractors engaged by an employer have separate PF Codes, the employer will be treated as “principal employer” and the overall responsibility for ensuring the compliance under EPF Act will lie with the employer. The said circular has been issued in contravention of the above settled position of law that contractors having separate PF Codes are independent employers and the establishment cannot be considered as principal employer for such contractors.

 

  • Initiating inquiries without establishing the existence of an employer-employee relationship between the covered establishment and casual workers

In the case of the vendors/contractors who do not have PF Code, the primary obligation is on the covered establishment to contribute employees’ provident fund in respect of workers who are engaged by vendors/contractors in connection with the work of the establishment and recover the amounts from the invoices of the contractors. However, in case it can be shown that the vendors/contractors have executed only a “contract for services” (and not a “contract of service”) with the workers for work which is neither regular nor in connection with the work/business of the establishment, it can be contended that such engagement does not establish an employer-employee relationship between the establishment and casual workers.

 

Hence, before the assessment of any liability, the authorities must first establish the existence of employer-employee relationship between establishment and casual workers. It is a settled position of law that the relevant factors to be considered for determining the question of employer-employee are: (a) who the appointing authority is; (b) who the pay master is; (c) who can dismiss; (d) the extent of control and supervision; and (e) how long alternative service lasts i.e. whether the ultimate authority over the man in the performance of his work resides in the employer so that he is subject to the latter’s order and direction (New Street Textiles Ltd. v. Union of India[13]). In view of the same, the authorities should appreciate and/or take into consideration the facts of the case and assess whether the establishment in any way (either directly or indirectly) exercises any control and supervision over such casual workers who are engaged on a non-exclusive basis and are providing services to other organisations also.

 

However, it is generally seen that the authorities initiate inquiries against the employers without establishing the existence of an employer-employee relationship between the establishment and the casual workers.

 

  • Blanket application of judgment Vivekananda Vidyamandir

 

In the recent past, there was a lack of clarity as to the legal position on the inclusion of special allowance within the ambit of wages for calculation of employees’ provident fund contribution and the divergent views had resulted in ambiguity amongst stakeholders including the employers, employees and the provident fund authorities. In this context, vide Regl. Provident Fund Commr. v. Vivekananda Vidyamandir[14] (Vivekananda Vidyamandir), the Supreme Court clarified the longstanding question of whether special allowances paid by an establishment to its employees would fall within the expression “basic wages” under Section 2(b)(ii) read with Section 6 of the EPF Act for computation of deduction towards employees’ provident fund. It was held that the crucial test is one of universality and “special allowances” which are uniformly, necessarily and ordinarily paid to all employees (generally or in a particular category) can be treated as part of “basic wages” for the purpose of computing provident fund contribution under the EPF Act.

 

Pursuant to the judgment, given the lack of clarity concerning the retrospective or prospective effect of the judgment of Vivekananda Vidyamandir[15], several PF Commissioners launched fishing and roving inquiries and issued inspection notices to employees proposing inspection of records of the previous years for ascertaining the wage structure as well as the allowances which may have been excluded from “basic wages”. Subsequently, a review petition was also filed against the judgment in Vivekananda Vidyamandir[16] which was dismissed by the Supreme Court on 28-8-2019.

 

Due to immense confusion caused post the judgment, on 28-8-2019, the EPFO issued a notice (bearing number C-I/1(33)2019/Vivekananda Vidyamandir/717) directing the curbing of unwarranted roving inquiries being initiated by authorities pursuant to a clarification issued by Vivekananda Vidyamandir[17] judgment regarding the ambit of “basic wages” under the EPF Act. The EPFO directed that all notices issued without any prima facie evidence to avoid EPF liability should not be pursued any further. Any investigation/inspection required to be initiated will require prior permission of the Central Analysis and International Unit (CAIU) and such inspection will be for cases having a credible basis that the employer has prima facie engaged in avoidance of liability under the EPF Act. Furthermore, all PF authorities were directed to adhere to the administrative guidelines pertaining to initiation of proceedings upon a prima facie and credible evidence of arbitrary splitting of basic wages. The said direction specifically stated, “there is no reason or justification to initiate roving inquiries into the wage structure of the complying establishments on the surmise that certain allowances in the nature of basic wages may not have been treated as part of pay for EPF contributions”.

 

Even though the EPFO in the notice dated 28-8-2019 has categorically stated that there is no reason or justification to initiate such roving inquiries into the wage structure of compliant establishments, the authorities continue to issue notices to the employers proposing inspection of their records of the previous years, solely for the purpose of determining allowances which may have been part of “basic wages” of the employees and had been excluded.

 

It is significant to state that the clarification provided by the Supreme Court in Vivekananda Vidyamandir[18] matter is in the nature of a change in law and in such context, strictly speaking, the authority cannot direct the employers to unilaterally bear the burden of such contribution. Even if the authority imposes liability to make contributions in respect of such previously excluded allowances in proceedings under Section 7-A of the EPF Act, the burden has to be shared by both the employer and the employee. Given that there is no provision under the EPF Act that allows for retrospective recovery of dues from the employee of an establishment, such large deductions cannot be made from the salaries of employees. Further, an employer has no right to deduct the contribution from the future wages payable to the employees, as has also been held by the Supreme Court in District Exhibitors Assn. v. Union of India[19] . Therefore, an employer cannot single-handedly make contributions to the authority. In the event any differential contribution is sought to be recovered from the principal employer, the same shall constitute undue hardship as was held in Shri Mahila Griha Udyog Lijjat Papad v. Union of India[20] . In view of the same, such inquiries initiated and conducted by PF Commissioners may be argued to be arbitrary and contrary to the settled position of law.

 


The Need for Regulation


The previous sections make it apparent that in many instances, the authorities tend to initiate fishing and roving inquiries against employers causing a deleterious impact on their pecuniary interests without benefiting the employees. In order to curb such inquiries, firstly, it is indispensable to bring a change at the grassroot level. It must be ingrained in the PF Inspectors, carrying out audits for exempted trust funds and inspections for unexempted trust funds, that an assessment under Section 7-A is different from the assessment of tax so that frivolous proceedings under Section 7-A of the EPF Act can be curbed at the preliminary stage of the issuance of a show-cause notice itself. Secondly, given that PF Commissioners are clothed with trappings similar to that of a court, they should act reasonably and fairly.  As a quasi-judicial authority, the PF Commissioners must assess the veracity of the allegations raised by the PF Inspectors in their report rather than mechanically relying on the reports submitted by a PF Inspector to help ensure that unwarranted Section 7-A proceedings can be avoided while still protecting the interests of the eligible employees in genuine cases. Further, the issue of lack of identifiability of the employees in respect of whom dues are being assessed is at large, and more so in cases where the inquiries are initiated for periods prior to 3-4 years. Moreover, the authorities, in view of the settled position of law, should not fasten liability on principal employers when contractors have independent PF Codes. Lastly, the authorities must assess the relationship between the establishment and the casual workers before initiating inquiry against the employer. While the Code on Social Security, 2020 appears to have recognised and addressed the issue of limitation, the other practical issues highlighted above in the present article require further regulation and more importantly, change in the approach/mindset of the PF Inspectors and the PF Commissioners from treating the EPF Act as a taxing statute to that of a socio-benevolent legislation intended to benefit the actual beneficiaries.

 


† Partner, Khaitan & Co.

†† Senior Associate, Khaitan & Co.

††† Associate, Khaitan & Co.

[1] 2005 SCC OnLine Ker 658 : (2006) 2 KLJ  135.

[2] (2008) 5 SCC 756 : 2008 LLR 980.

[3] 2015 SCC OnLine P&H 20497 : 2015 LLR 269.

[4] 2016 SCC Online Pat 2402.

[5] 1974 SCC OnLine Del 224 : 1975 Lab IC 954.

[6] 1981 SCC OnLine Del  220 : 1982 Lab IC 1787.

[7] (1990) 1 SCC 68 : 1990 LLR 64.

[8] 2015 SCC OnLine P&H 20678 : 2015 LLR 726.

[9] 2011 SCC OnLine Del 4010 : 2012 LLR 22.

[10] 2011 SCC OnLine Mad 1350 :2015 LLR 635.

[11] 2015 SCC OnLine P&H 20665 : 2015 LLR 1023.

[12] 2012 SCC OnLine P&H 22038 : 2013 LLR 243.

[13] 1974 SCC OnLine Ker 120 : 1975 KLT 426.

[14] (2020) 17 SCC 643.

[15] (2020) 17 SCC 643.

[16] (2020) 17 SCC 643.

[17] (2020) 17 SCC 643.

[18] (2020) 17 SCC 643.

[19] (1991) 3 SCC 119 : AIR 1991 SC 1381.

[20] (1999) 6 SCC 38 : (2000) 84 FLR 155.


Views expressed in this article are strictly personal and do not constitute legal/professional advice of Khaitan & Co. For any further queries or follow up, please contact us at editors@khaitanco.com.

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal (ITAT), New Delhi: The Coram of Pradip Kumar Kedia (Accountant Member) and Narender Kumar Choudhry (Judicial Member) allowed an appeal which was filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals) -XXXVI, New Delhi passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 concerning AY 2013-14. The instant appeal challenged the disallowance of Rs 45,60,061 on account of delayed payment of employee’s contribution towards EPF and ESIC.

The Tribunal on perusal of records observed that the Assessing Officer has made the impugned addition on the ground that the assessee has deposited employee’s contribution towards Provident Fund and ESI amounting to Rs 45,60,061/ – after due date as prescribed under the relevant Act/ Rules in breach of Explanation 5 to Section 43B of the Act. The Assessing Officer accordingly resorted to the additions under Section 36(1)(va) read with Section 2(24) (x) of the Act. Case of the assessee before lower authorities was that it had deposited the employee’s contribution in EPF and ESIC before the due date of filing of return of income stipulated under Section 139(1) of the Act.

The Tribunal found that a similar issue was decided in favour of the assessee by the Delhi High Court in the case of Pr.CIT v. Pro Interactive Service (India) (P) Ltd., ITA No.983 of 2018 order dated 10-09-2018 extract of which is as under:

“In view of the judgment of the Division Bench of Delhi High Court in Commissioner of Income-Tax versus Aimil Limited, (2010) 321 ITR 508 (Del ) the issue is covered against the Revenue and, therefore, no substantial quest ion of law arises for consideration in this appeal . The legislative intent was / is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee’s Provident Fund (EPF) and Employee’s State Insurance Scheme (ESI ) as deemed income of the employer under Sect ion 2(24) (x) of the Act .”

Following the above binding precedents the Tribunal directed the Assessing Officer to allow the claim of the assessee and delete the addition. The Tribunal allowed the appeal of the assessee finding that the delayed payment of employee’s contribution to EPF/ESIC is not disallowable as the amendments to Section 36(1) (va) and Section 43B effected by Finance Act, 2021 were applicable prospectively in relation to Assessment Year 2021-22 and subsequent years. Therefore, the claim of deduction of contribution to Employee’s State Insurance Scheme (ESI) and Provident Fund u/s.36(1) (va) could not be denied to the assessee in Assessment Year 2014-15 in question on the basis of amendments made by Finance Act , 2021 finding support from the decision of the Co-ordinate Bench of Tribunal in the case of The Continental Restaurant and Café Company v. ITO, (2021) 91 ITR (Trib. )(S.N. ) 60 (Bang. ) and Adyar Ananda Bhavan Sweets India P. Ltd. vs. ACIT, ITA No.402 and 403/Chny/2021 order dated 08-12-2021.[Kiwi Enterprises (P) Ltd. v. ACIT, 2022 SCC OnLine ITAT 148, decided on 21-04-2022]


Appellant by: None

Respondent by: Shri Parikshit Singh, Sr.D.R.


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The bench of Ajay Rastogi and Abhay S. Oka, JJ has held that any default or delay in the payment of EPF contribution by the employer under the Employees Provident Fund & Miscellaneous Provisions Act, 1952 is a sine qua non for imposition of levy of damages under Section 14B and mens rea or actus reus is not an essential element for imposing penalty/damages for breach of civil obligations/liabilities.

In the case at hand, the establishment of the appellant(s) was covered under the provisions of the Act 1952, but still failed to comply with the same and for such non-compliance of the mandate of the Act 1952, initially the proceedings were initiated under section 7A and after adjudication was made in reference to contribution of the EPF which the appellant was under an obligation to pay and for the contravention of the provisions of the Act 1952, the appellant(s) indeed committed a breach of civil obligations/liabilities and after compliance of the procedure prescribed under the Act 1952 and for the delayed payment of EPF contribution for the period January 1975 to October 1988, after affording due opportunity of hearing as contemplated, order was passed by the competent authority directing the appellant(s) to pay damages as assessed in accordance with Section 14B of the Act 1952.

The Division Bench of Karnataka High Court under the impugned judgment held that once the default in payment of contribution is admitted, the damages as being envisaged under Section 14B of the Act 1952 are consequential and the employer is under an obligation to pay the damages for delay in payment of contribution of EPF under Section 14B of the Act 1952.

The Supreme Court was, hence, called upon what will be the effect and implementation of Section 14B of the Act 1952 and as to whether the breach of civil obligations or liabilities committed by the employer is a sine qua non for imposition of penalty/damages or the element of mens rea or actus reus is one of the essential elements has a role to play and the authority is under an obligation to examine the justification, if any, being tendered while passing the order imposing damages under the provisions of the Act 1952.

The Court relied on the three-Judge Bench ruling in Union of India v. Dharmendra Textile Processors, (2008) 13 SCC 369 while examining the scope and ambit of Section 271(1)(c) of the Income Tax Act, 1961 held that as far as the penalty inflicted under the provisions is a civil liability is concerned, mens rea or actus reus is not an essential element for imposing civil penalties

“18. The Explanations appended to Section 271(1)(c) of the IT Act entirely indicates the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. … Object behind enactment of Section 271(1)(c) read with Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276-C of the IT Act.”

Bound by the ruling in the aforementioned judgment, the Court upheld the verdict of the High Court.

[Horticulture Experiment Station Gonikoppal, Coorg v. Regional Provident Fund Organization, 2022 SCC OnLine SC 223, 23.02.2022]


*Judgment by: Justice Ajay Rastogi

Case BriefsHigh Courts

Sikkim High Court: Meenakshi Madan Rai, J., decided on a petition wherein the petitioner body established under the Sikkim Municipalities Act, 2007, claimed that the provisions of the Employees‟ Provident Funds and Miscellaneous Provisions Act,

1952, (“EPF & MP Act, 1952”) was not applicable in the State of Sikkim as it was not enforced in compliance to the provisions of Article 371F of the Constitution of India. The prayers were as follows:

(a) to hold that the provisions of the Central Act are not applicable to the Petitioner; and

(b) to hold that the provisions of the Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 is not applicable to the Petitioner Corporation; and

(c) to hold that the Petitioner is not the principal employer of the Municipal wards Association/Committee/Samaj which is a non-profit making NGO as decided by the Respondents; and

(d) to issue an appropriate writ in the nature of mandamus or any other writ, order or direction holding that the proceedings conducted by the Respondents is without jurisdiction, bad and illegal; and/or

(e) to issue an appropriate writ in the nature of mandamus or certiorari or any other writ, order or direction quashing the Order dated 05.07.2019 passed by the Respondent;

(f) and upon cause/s being shown and after hearing the parties be pleased to make the rule absolute and/or pass such other orders;

(g) to pass any other direction/s, relief/s, order/s that may be deemed fit and proper in the circumstances of this case;

(h) to allow the costs of the Writ Petition in favour of the Petitioner.

Counsel for the respondents challenged the maintainability of the Petition contended that where an alternative, efficacious remedy is available, the Writ Jurisdiction of this Court cannot be invoked and that it was a settled law that Petitions under Writ Jurisdiction are not to be entertained by the High Court when an efficacious, alternative remedy is available, this being a Rule of self-imposed limitation, although discretion lies with the Court to permit a Petition under Article 226 of the Constitution, despite existence of such a remedy.

The Court in the light of the specific provisions of law and the observations made in the ratiocinations referred to by the counsel of the respondent opined that before invoking the Writ Jurisdiction of this Court, the Petitioner was to necessarily exhaust the remedy available to it under the Statute.[Gangtok Municipal Corporation v. Union of India, 2021 SCC OnLine Sikk 161, decided on 22-10-2021]


Suchita Shukla, Editorial Assistant has reported this brief.


 

Case BriefsSupreme Court

Supreme Court: The bench of UU Lalit and Ajay Rastogi, JJ has referred the question as to whether there would be a cut-off date under paragraph 11(3) of the Employees’ Pension Scheme to a larger bench. The larger bench will also decide whether the decision in R.C. Gupta v. Regional Provident Fund Commissioner Employees Provident Fund Organization, (2018) 4 SCC 809 would be the governing principle on the basis of which all these matters must be disposed of.

What was held in RC Gupta case?

In R.C. Gupta v. Regional Provident Fund Commissioner Employees Provident Fund Organization, (2018) 4 SCC 809, the Court had held that

“… the reference to the date of commencement of the Scheme or the date on which the salary exceeds the ceiling limit are dates from which the option exercised are to be reckoned with for calculation of pensionable salary. The said dates are not cut-off dates to determine the eligibility of the employer-employee to indicate their option under the proviso to Clause 11(3) of the Pension Scheme.

In RC Gupta case, the Court was dealing with a matter where the employer had deposited 12% of the actual salary and not 12% of the ceiling limit of Rs 5000 or Rs 6500 per month, as the case may be. In such a case, the Court held that a beneficial scheme, in our considered view, ought not to be allowed to be defeated by reference to a cut-off date.

“We do not see how exercise of option under Para 26 of the Provident Fund Scheme can be construed to estop the employees from exercising a similar option under Para 11(3). If both the employer and the employee opt for deposit against the actual salary and not the ceiling amount, exercise of option under Para 26 of the Provident Scheme is inevitable. Exercise of the option under Para 26(6) is a necessary precursor to the exercise of option under Clause 11(3). Exercise of such option, therefore, would not foreclose the exercise of a further option under Clause 11(3) of the Pension Scheme unless the circumstances warranting such foreclosure are clearly indicated.”

The Court had explained that if both the employer and the employee opt for deposit against the actual salary and not the ceiling amount, exercise of option under Para 26 of the Provident Scheme s inevitable. Exercise of the option under Para 26(6) is a necessary precursor to the exercise of option under Clause 11(3). Exercise of such option, therefore, would not foreclose the exercise of a further option under Clause 11(3) of the Pension Scheme unless the circumstances warranting such foreclosure are clearly indicated.

It was, hence, noticed that all that the Provident Fund Commissioner is required to do is an adjustment of accounts which in turn would have benefited some of the employees. At best what the Provident Commissioner could do was to seek a return of all such amounts that the employees concerned may have taken or withdrawn from their provident fund account before granting them the benefit of the proviso to Clause 11(3) of the Pension Scheme. Once such a return is made in whichever cases such return is due, consequential benefits in terms of this order will be granted to the said employees.

Why is the decision required to be re-visited?

Senior Advocate C.A. Sundaram invited the Court’s attention towards the difference between the Provident Fund Scheme and the Pension Scheme.

Under Provident Fund scheme, the contributions made by the employer and the employees during the employment of the employee would be made over to the employee along with interest accrued thereon at the time of his retirement. Thus, the obligation on the part of the operators of the Provident Fund Scheme would come to an end, after the retirement of the employee; whereas the obligation under the Pension Scheme would begin when the employee retired. The liability was only to pay interest on the amount deposited and to make over the entire amount at the time of his retirement.

Under Pension scheme, it would be for the operators of the Pension Scheme to invest amount deposited in such a way that after the retirement of the concerned employee the invested amount would keep on giving sufficient returns so that the pension would be paid to the concerned employee not only during his life time but even to his family members after his death. If the option under paragraph 11(3) of the Scheme, was to be afforded well after the cut-off date, it would create great imbalance and would amount to cross-subsidization by those who were regularly contributing to the Pension Scheme in favour of those who come at a later point in time and walk away with all the advantages.

Hence, it was submitted that the emphasis on investment of the amount in both the funds would qualitatively be of different dimension.

This difference was enunciated in Krishena Kumar Vs. Union of India, (1990) 4 SCC 207 and was not noted in the subsequent decision in R.C. Gupta. Submitting that it would not be a mere adjustment of amount to transfer from one fund to another as stated in R.C. Gupta case, it was submitted before the Court that the decision in R.C. Gupta was required to be re-visited.

The Court, hence, noted that

“These, and the other submissions touching upon the applicability of the principle laid down in the decision in R.C. Gupta1 go to the very root of the matter. Sitting in a Bench of two Judges it would not be appropriate for us to deal with said submissions. The logical course would be to refer all these matters to a Bench of at least three Judges so that appropriate decision can be arrived at.”

The matter has hence, been referred to a larger bench.

[Employees’ Provident Fund Organisation v. Sunil Kumar B., 2021 SCC OnLine SC 630, decided on 24.08.2021]

Case BriefsSupreme Court

Supreme Court: In a case where a company provided trained and efficient security guards to clients, claimed that security guards were the employees of the client, the was bench of Navin Sinha* and Surya Kant, JJ has held that merely because the client pays money under a contract to the appellant and in turn the appellant pays the wages of such security guards from such contractual amount received by it, it does not make the client the employer of the security guard nor do the security guards constitute employees of the client.

Background

By Notification dated 17.05.1971[1] issued under Section 1(3)(b) of the EPF Act, the provisions of the EPF Act were made applicable to specified establishment rendering expert services and employing twenty or more persons.

The appellant contended that it was not covered by the said Notification since it was not engaged in rendering any expert services and merely facilitated in providing Chowkidars to its clients at the request of the latter. The salary was paid to the Chowkidars by the client who engaged their services and that the appellant had only 5 persons on its rolls.

The Assistant Provident Fund Commissioner on basis of balance sheets seized during a raid opined that

  • the appellant had more than twenty employees on its rolls and stood covered by the term “expert services” such as providing of personnel under the Notification.
  • wages were not paid directly by the clients to the security guards deployed by the appellant but that the payments were made by the clients to the appellant, who in turn disbursed wages to the security guards.
  • the remedy of an appeal before the Tribunal under Section 7-I was bypassed by the appellant instituting the writ petition directly.

The Allahabad High Court declined interference with the conclusion of expert services being rendered by the appellant. A review petition contending that the appellant stood duly registered under the Private Security Agencies (Regulation) Act, 2005 was also rejected.

Analysis

Private Security Agencies (Regulation) Act, 2005

The Act of 2005 defines a private security agency under Section 2(g) as an organization engaged in the business of providing security services including training to private security guards and providing such guards to any industrial or business undertakings or a company or any other person or property.  A licence is mandatory under Section 4 and those security agencies existing since earlier were mandated to obtain such licence within one year of coming into force of the Act.

A complete procedure is provided with regard to making of an application for grant of a licence under Section 7, renewal under Section 8 of the Act.The eligibility for appointment as a security guard with such security agency is provided under Section 10 of the Act.

Section 11 provides for the condition of the licence and the licence can be cancelled under Section 13. A private security agency under Section 15 is required to maintain a register inter alia with the names, addresses, photographs and salaries of the private security guards and supervisors under its control.

Private Security Agencies Central Model Rules, 2006

The 2006 Rules framed under the Act of 2005, requires verification by the security agency before employing any person as a security guard or supervisor in the manner prescribed. Proper security training of the person employed is the responsibility of the security agency under Rule 5, and Rule 6 prescribes the standard of physical fitness for security guards.

Under Rule 14 the security agency is required to maintain a Register in Form VIII, Part-I of which contains details of the management, Part¬II contains the name of guard, his parentage, address, photograph, badge no. and the salary with the date of commencement.

Part III contains the name of the customer, address, the number of guards deployed, date of commencement of duty and date of discontinuance.

Part IV contains the name of the security guard/supervisor, address of the place of duty, if accompanied by arms, date and time of commencement of duty and date and time of end of duty.

Conclusion

Considering the aforementioned analysis, the Court concluded that the appellant is engaged in the specialised and expert services of providing trained and efficient security guards to its clients on payment basis. The provisions of the Act of 2005 make it manifest that the appellant is the employer of such security guards and who are its employees and are paid wages by the appellant.

Merely because the client pays money under a contract to the appellant and in turn the appellant pays the wages of such security guards from such contractual amount received by it, it does not make the client the employer of the security guard nor do the security guards constitute employees of the client. The appellant therefore is squarely covered by the Notification dated 17.05.1971.

The Court further noticed that the appellant refused to show the statutory registers under the Act of 2005 to the authorities under the EPF Act.  It also took note of the letter dated 03.04.2001 written by the appellant, with the appellant’s balance sheet seized for the financial years 2003¬04, 2004-05,   2005¬06 and 2006¬07 showing payment of wages running into lacs.

The Court, hence, concluded that the appellant has more than 20 employees on its roles and hence, provisions of the Act therefore necessarily apply to it.

[Panther Security Services Pvt. Ltd. v. Employees’ Provident Fund Organisation, 2020 SCC OnLine SC 981, decided on 02.12.2020]


*Justice Navin Sinha has penned this judgment. Read more about him here

For appellant: Advocate S. Sunil

For Respondent: Advocate Divya Roy

[1] “G.S.R. No. 805 : In exercise of the powers conferred by clause   (b)   of   sub-section   (3)   of   Section   1   of   the Employees’ Provident Funds and Family Pension Fund Act, 1952 (19 of 1952), the Central Government hereby specifies that with effect from the  31st May, 1971, the said Act shall apply to every establishment rendering expert services such as supplying of personnel, advice on domestic or departmental enquiries, special services in rectifying pilferage, thefts and payroll, irregularities to factories   and   establishments   on   certain   terms   and conditions   as   may   be   agreed   upon   between   the establishment and the establishment rendering expert services and employing twenty or more persons.”
Legislation UpdatesRules & Regulations

Union Ministry of Labour and Employment has notified the draft rules under the Code on Social Security, 2020 on 13.11.2020 inviting objections and suggestions, if any, from the stakeholders. Such objections and suggestions are required to be submitted within a period of 45 days from the date of notification of the draft rules.

The draft rules provide for operationalization of provisions in the Code on Social Security, 2020 relating to Employees’ Provident Fund, Employees’ State Insurance Corporation, Gratuity, Maternity Benefit, Social Security and Cess in respect of Building and Other Construction Workers, Social Security for Unorganised Workers, Gig Workers and Platform Workers.

The draft rules also provide for Aadhaar based registration including self-registration by unorganised workers, gig workers and platform workers on the portal of the Central Government. Ministry of Labour and Employment has already initiated action for the development of such portal. For availing any benefit under any of the social security schemes framed under the Code, an unorganised worker or a gig worker or platform worker shall be required to be registered on the portal with details as may be specified in the scheme.

The rules further provide for Aadhaar based registration of Building and Other Construction Workers on the specified portal of the Central Government and the State Government or the State Welfare Board. Where a building worker migrates from one State to another he shall be entitled to get benefits in the State where he is currently working and it shall be the responsibility of the Building Workers Welfare Board of that State to provide benefits to such a worker.

Provision has also been made in the rules regarding gratuity to an employee who is on fixed-term employment.

The rules also provide for single electronic registration of an establishment including cancellation of the registration in case of closure of business activities.

Provision has also been made regarding manner and conditions for exiting of an establishment from EPFO and ESIC coverage.

The procedure for self-assessment and payment of Cess in respect of building and other construction workers has been elaborated in the rules. For the purpose of self-assessment, the employer shall calculate the cost of construction as per the rates specified by the State Public Works Department or Central Public Works Department or on the basis of return or documents submitted to the Real Estate Regulatory Authority.

The rate of interest for delayed payment of such cess has been reduced from 2 per cent every month or part of a month to 1 per cent. Under the existing rules, the Assessing Officer has the power to direct that no material or machinery can be removed or disturbed from the construction site. Such power for indefinitely stopping of construction work has been withdrawn in the draft rules. Further, under the draft rules, the assessing officer can visit the construction site only with the prior approval of the Secretary of the Building and Other Construction Workers Board.

The rules have also provided for the manner of payment of contribution by the aggregators through self-assessment.

For Draft Notification of Rules (Hindi & English) under Code on Social Security please click on the Link


Ministry of Labour and Employment

[Press Release dt. 15-11-2020]

[Source: PIB]

Legislation UpdatesStatutes/Bills/Ordinances

The Code on Social Security, 2020 received Presidential Assent on 28-09-2020.

The Code on Social Security, 2020

Second National Commission on Labour, which submitted its report in June, 2002 had recommended that the existing set of labour laws should be broadly amalgamated into the following groups, namely:—

(a) industrial relations; (b) wages; (c) social security; (d) safety; and (e) welfare and working conditions.

With the introduction of the Code, the following Acts are repealed:

 1. The Employee’s Compensation Act, 1923;

2. The Employees’ State Insurance Act, 1948;

3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;

4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;

5. The Maternity Benefit Act, 1961;

6. The Payment of Gratuity Act, 1972;

7. The Cine-Workers Welfare Fund Act, 1981;

8. The Building and Other Construction Workers’ Welfare Cess Act, 1996;

9. The Unorganised Workers Social Security Act, 2008.

Benefit of amalgamation of the above-stated laws:

It will remove the multiplicity of definitions and authorities without compromising the basic concepts of welfare and benefits to workers.

Widening the scope of the benefits to the fixed-term employees would be a big step towards equity.

Features of the Bill:

(i) to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and workers either in the organised or unorganised or any other sectors;

(ii) to provide for an establishment to be covered under Chapter III relating to Employees’ Provident Fund (EPF) and under Chapter IV relating to Employees State Insurance Corporation (ESIC) on a voluntary basis even if the number of employees in that establishment is less than the threshold. It further seeks to make those Chapters inapplicable to such establishments on fulfilment of certain conditions;

(iii) to define various expressions used in the Bill such as, “career centre”, “aggregator”, “gig worker”, “platform worker”, “wage ceiling”, etc. Further, the definition of “employee” has been comprehensively elaborated to cover maximum number of employees and workers;

(iv) to provide for registration, electronically or otherwise, of every establishment to which the Bill applies, within such time and in such manner as the Central Government may by rules determine. It further provides for an option for cancellation of registration by any establishment whose business activities are in the process of closure, subject to the conditions as may be prescribed by the Central Government;

(v) constitution of various social security organisations for the administration of the Bill, namely, (a) the Central Board of Trustees of the Employees’ Provident Fund (Central Board), (b) the Employees’ State Insurance Corporation (Corporation), (c) the National Social Security Board for Unorganised Workers (National Social Security Board), (d) the State Unorganised Workers’ Social Security Board and (e) the State Building Workers Welfare Boards;

(vi) to provide that the medical education institutions and training institutes of the Employees’ State Insurance Corporation may be run by the Corporation itself or on the request of the Corporation, by the Central Government, any State Government, any Public Sector Undertaking of the Central Government or the State Government or any other body notified by the Central Government;

(vii) to empower the Central Government to frame schemes for unorganised workers, gig workers and platform workers and the members of their families for providing benefits relating to Employees’ State Insurance Corporation;

(viii) provisions for maternity benefits such as prohibition from work during certain periods, provision of nursing breaks, crèche facility, claim for maternity benefits, etc.;

(ix) to empower the Central Government, by notification, to assign additional work, including administration of any other enactment or scheme relating to social security, to any of the social security organisations and the expenses towards such additional work shall be borne by the Central Government;

(x) to empower the Central Government to frame schemes for the purposes of providing social security benefits to self-employed workers or any other class of persons;

(xi) to empower the Central Government to specify by notification, rates of employees’ contributions to the Employees’ Provident Fund Scheme and the period for which such rates shall apply for any class of employee;

(xii) to provide for an appeal against an order passed by any authority in regard to determination and assessment of dues and levy of damages relating to Employees’ Provident Fund by an employer only after depositing with Social Security Organisation concerned, twenty-five per cent. of the amount due from him as determined by the authority against whose order the appeal has been preferred;

(xiii) to provide that in the case of an employee employed on fixed-term employment or a deceased employee, the employer shall pay gratuity on a pro-rata basis and not on the basis of continuous service of five years;

(xiv) to make provision for payment of cess by an employer in case of building and other construction work, payable under Chapter VIII on the basis of his self-assessment;

(xv) to provide for the registration of every unorganised worker, gig worker or platform worker on the basis of self-declaration electronically or otherwise, along with such documents including Aadhaar number, in such form and in such manner, containing such information as may be prescribed by the Central Government;

(xvi) to empower the Central Government by order, to defer or reduce employer’s contribution, or employee’s contribution, or both, payable under Chapter III or Chapter IV, as the case may be, for a period up to three months at a time, in respect of establishment to which Chapter III or Chapter IV, as the case may be, applies, for the whole of India or part thereof in the event of a pandemic, endemic or national disaster;

(xvii) to provide for establishment and maintenance of separate accounts under social security fund, for the welfare of unorganised workers, gig workers and platform workers; and a separate account for the amount received from the composition of offences under the Bill or under any other central labour laws.

Read the detailed Act, here: Code on Social Security, 2020


Ministry of Law and Justice

COVID 19Hot Off The PressNews

EPFO released  Rs  868 crore pension along with Rs 105 crore arrear on account of restoration of commuted value of pension.

On the recommendation of Central Board of Trustees (EPFO), the Government of India accepted one of the long standing demands of workers to allow restoration of commuted value of pension after 15 years. Earlier there was no provision for restoration of commuted pension and the pensioners continued to receive reduced pension on account of commutation lifelong. This is a historical step for the benefit of pensioners under EPS-95.

EPFO has more than 65 lakhs pensioners catered through its 135 regional offices. EPFO officers and staff battled all odds during this Covid-19 lockdown period  and processed pension payment for May, 2020  to ensure credit of pension in the bank account of pensioners on schedule.


Ministry of Labour and Employment

[Press Release dt. 01-06-2020]

[Source: PIB]

Business NewsCOVID 19Hot Off The PressNews

Background:

Amidst the Corona crisis, PM announced  a special economic package with a new resolution. This economic package will serve as an important link in the ‘AtmaNirbhar Bharat Abhiyan” (Self Reliant India Campaign)‘.

What the Prime Minister said about the package?

In the recent past economic announcements made by the government related to the Corona crisis, which were the decisions of the Reserve Bank. The economic package that is being announced today, if added, comes to around Rs. 20 lakh crores. This package is about 10 percent of India’s GDP. With this various sections of the country and those linked to economic system will get support and strength of 20 lakh crore rupees. This package will give a new impetus to the development journey of the country in 2020 and a new direction to the Self-reliant India campaign. In order to prove the resolve of a self-reliant India, Land, Labor, Liquidity and Laws all have been emphasized in this package.

This economic package is for our cottage industry, home industry, our small-scale industry, our MSME, which is a source of livelihood for millions of people, which is the strong foundation of our resolve for a self-reliant India. This economic package is for that labourer of the country, for the farmers of the country who are working day and night for the countrymen in every situation, every season. This economic package is for the middle class of our country, which pays taxes honestly and contributes to the development of the country. This economic package is for Indian industries, which are determined to give a boost to the economic potential of India. Starting tomorrow, over the next few days, the Finance Minister will give you detailed information about this economic package inspired by the ‘Self-reliant India campaign’.

First press conference on the decoding Rs 20 Lakh Crore Package held today.

LIVE UPDATES

  • Focal point: Liquidity, Labour, Law and Land.
  • 6 Major steps for MSMEs
  • Collateral free Automatic Loans upto Rs 3 lakh Crores
  • 100 % credit guarantee
  • Additional Funds for MSME revival
  • Loans to be given till October 31st
  • Rupees 20 Crore for stressed MSMEs
  • 50,000 Crore equity to be infused for viable and potential MSMEs
  • New Definition of MSMEs — Investment can be upto 1 Cr and turnover upto 5 Crore
  • Global tender to be allowed upto Rs 20 Crores
  • Other interventions for MSMEs
  • Rs 2500 crores EPF support for businesses and Workers for 3 months
  • EPF contribution reduced for Business and Workers for 3 months — Rs 6750 Crores
  • Rs 30,000 crores liquidity facility for NBFC/HCs/MFIs
  • Rs 45,000 Crores Partial Credit Guarantee Scheme 2.0 for NBFC
  • Rs 90,000 CR liquidity injection for DISCOMs
  • Relief to contractors
  • Extension of registration and completion date of real estate projects under RERA; No individual applications needed; Suo Moto be done; Registered projects expiring on or after 25th March
  • Rs 50,000 crores Liquidity through TDS/TCS reductions till March 2021
  • Tax filing due date extended to 30th November, 2020
  • Pending refunds to charitable trusts and non-corporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately.
  • Due date of all income tax return for FY2019-20 extended from 31st July, 2020 & 31st October, 2020 to 30th November, 2020 and Tax audit from 30th September, 2020 to 31st October, 2020.
  • Date of Assessments getting barred on 30th September, 2020 extended to 31st December, 2020 and those getting barred on 31st March, 2021 will be extended to 30th September, 2021.
  • Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December, 2020
COVID 19Legislation UpdatesNotifications

Union Ministry of Labour and Employment has issued notification GSR 225(E) amending EPF Scheme 1952 to allow withdrawal of non-refundable advance by EPF members/subscribers in the wake of COVID -19 pandemic in the country. The notification permits withdrawal of upto the amount of basic wages and dearness allowance for three months or upto 75% of the amount standing to member’s credit in the EPF account, whichever is less, in the event of outbreak of epidemic or pandemic.

COVID-19 has been declared pandemic by appropriate authorities for the entire country and therefore employees working in establishments and factories across entire India, who are members of the EPF Scheme, 1952 are eligible for the benefits of non-refundable advance. A sub-para(3) under para 68L has been inserted in the EPF scheme,1952. The amended scheme Employees Provident Fund (Amendment) Scheme, 2020 has come into force from 28 March, 2020.

Following the notification, EPFO has issued directions to its field offices for promptly processing any applications received from EPF members to help them fight the situation. In its communication EPFO has stated that officers and staff must process claims of EPF subscribers promptly so that relief reaches the worker and his family to help them fight with COVID-19.

To read the notification, please click on the link below:

NOTIFICATION


Ministry of Labour & Employment

[Press Release dt. 29-03-2020]

[Source: PIB]

Business NewsNews

As reported by media,

Employees’ Provident Fund Organisation (EPFO) will pay interest at the rate of 8.5 per cent for the current financial year.

This is lower than the 8.65% interest rate given on employees’ provident fund (EPF) deposits for the previous financial year 2018-19.

Central Board of Trustees (CBT) of Employees Provident Fund Organisation (EPFO) has recommended an interest rate of 8.5 per cent on provident funds for Financial Year 2019-2020.


[Economic Times]

Hot Off The PressNews

As reported by money control, Ministry of Labour and Employment has recommended reducing the contribution made by employees towards the Employees’ Provident Fund (EPF).

Presently, the mandated EPF contribution is 24 percent of basic pay, divided equally between employers and employees. The above-made suggestion is a part of the proposed Employees’ Provident Fund and Miscellaneous Bill, 2019.

It has been stated that once there would be a reduction in worker’s contribution to the Employees’ Provident Fund (EPF) it would result in the improvement of their in-hand-salaries.

Another proposal is allowing employees to switch between the Pension Fund Regulatory and Development Authority-run National Pension Scheme (NPS) to the Employees Provident Fund Organisation (EPFO) scheme.

A preliminary draft of the EPF and MP (Amendment) Bill, 2019, dated August 23 has sought suggestions and comments until September 22, 2019.


[Source: MoneyControl]

Hot Off The PressNews

The subscribers of Employees Provident Fund Organisation (EPFO) who resign from their service can now withdraw 75% of their total provident fund after one month from the date of cessation of service to meet their monthly financial commitments. Members will continue to have the choice of withdrawing the entire amount, if they want to close the account, after two months. A decision to this effect was taken at the 222nd Central Board of Trustees (CBT) meeting of EPFO on 27th June.

Moreover, the subscriber may not withdraw the remaining amount, thus ensuring he continues to get social security on the existing account. Currently, the EPF Scheme 1952 allows final withdrawal after two months from the date of cessation of employment of the member, as a result of which many members end up withdrawing the entire amount. This leads to closure of the account and no social security cover for the subscribers. With this new provision, members will now have an option to retain their account with the EPFO, which one can use after finding another job. CBT has also decided to extend the term of SBI Mutual Fund and UTI Mutual Fund, the two fund managers for EPFO investment in exchange-traded funds (ETFs), by one year to July 2019. Their term was due to end on June 30, 2018.

CBT, the highest decision-making body of EPFO, comprises equal number of representatives of employees, employers and state government representatives. It is chaired by the labour minister.

[Source: Economic Times]