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Private provident fund trusts of top public sector and private sector organizations enjoying income tax exemption will face action if their proposals for exemption did not make it to the Employees Provident Fund offices by November 15.
The Employees Provident Fund Organisation has asked its field staff to submit all pending proposals for income tax exemption for 295 private provident fund trusts latest by November 15. These trusts have been enjoying exemption on a "deemed exempt" basis so far for which, the EPFO has blamed its own regional offices and has said that in future no exemption would be granted on an ad hoc basis.
It said that failure to submit verified proposals by November 15 would invite action against these funds which have been enjoying exemption though their proposals have either not been submitted or no verification done of their compliance to conditions set in the Income Tax Act for such private trusts. Some of these exemptions date back to the sixties, but continue to be unverified for compliance of conditions specified in the Income Tax Act as per an amendment made in 2006.
Deadlines for verification of proposals as per these conditions have been given since 2006 but the process has either not been initiated or not completed in the case of these organizations, according to the EPFO.
These exempt funds include those of Government organizations like Airports Authority of India, and Food Corporation of India, exchanges like National Stock Exchange and Bombay Stock Exchange, top firms in the private sector including Nokia, Reliance, and Coca Cola, media organizations, public schools, NGOs and hospitals.
This requirement followed an amendment in the Income Tax Act in 2006 which provided that the Chief Commissioner or Commissioner may accord recognition to any provident fund which, in his opinion, satisfies the conditions prescribed in Rule 4 of the Act and may, at any time, withdraw
such recognition if, in his opinion, the provident fund contravenes any of those
conditions : It added the proviso that the funds which did not qualify and have got recognition before March 2006 can satisfy these conditions before March 2007.
This deadline was subsequently extended several times and the EPFO has said that the Finance Ministry would not be extending it any further than October 31. Hence all proposals are to be verified and submitted latest by November 15 this year.
Funds that don’t meet the conditions in the Act would face action, it said. The last deadline for compliance to conditions was March 2013.
In some of these cases, the establishments are enjoying relaxation though exemption
proposals have not yet been forwarded to Head Office while in others, proposals for relaxation/exemption submitted by the establishments have not yet been processed. In some cases, compliance to EPFO directions are still awaited.
The detailed circular which almost accuses EPFO offices of colluding with private trusts, says : ''In the past, field offices had granted relaxation without forwarding the
exemption proposal in complete shape to appropriate authority. As a result,establishments have been enjoying relaxation for years together and no steps were taken to process the exemption proposals pending for notification by
Appropriate Government.
''The exemption proposals are submitted by Regions to Head Office in a very casual way without proper verification of all check points, without analyzing the compliance audit reports and without all required documents,’’ it says.
It pointed out that there are instances wherein Regional Provident Fund Commissioners In-charge of Regional/Sub Regional Offices have recommended proposals for grant of exemption even though the Trusts have violated the mandatory conditions.
Exempted private provident fund trusts which face the ultimatum include NGOs Gram Vikas in Orissa, and SOS Children’s Villages of India, BHEL in Dehradun, and Tamil Nadu, Dalmia Cement Bharat Ltd in Delhi, Indian Trade Promotion Organisation, Gas Authority of India, Airports Authority of India, State Trading Corporation, MMTC Ltd, National Seeds Corporation Ltd, Food Corporation of India, Confederation of Indian Industry Delhi, HUDCO, media groups Ambuja Publications (Amar Ujala) and Living Media India Pvt Ltd, Modern Food India Ltd, Kanpur, Ultra Tech Cement Ltd, (Nagpur) Ashok Leyland Ltd, (Nagpur) BALCO, Raipur, IL&FS Bandra, American Express Bank Bandra, Forbes India, Bandra, , Bandra, Oxford University Press, Bandra, GIC Housing Finance, Banra, Maharashtra State Power Generation Co, Gem and Jewelery Export Council, Bandra, JK Tyres Mysore, Kudremukh Iron Co Ltd, Gulbarga, Mother Dairy, Delhi, IRMA, Ahmedabad,Coca cola India, Gurgaon, Agilent Technologies, Gurgaon, Baxter India, Gurgaon, Nokia India, Gurgao, Reliance Jam Nagar Infrastructure, Reliance Haryana SEZ, Reliance Industries Ltd (Nagpur) Reebok India, GE India Industries Pvt Ltd, Genepact Ltd, Delhi, Fortis Healthcare, Delhi, Punj Loyd Delhi.
