An empowered committee of the retirement fund body EPFO on Friday approved granting regular tax exemption to 68 private provident fund trusts, which would provide tax benefits for subscribers of these firms.
The meeting was called as 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).
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.
EPFO Central PF Commissioner K K Jalan told PTI, "The first meeting of an empowered committee held today for granting regular tax exemption to private PF trusts. We have approved 68 such cases.
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, EPFO is still processing applications from 168 such trusts, for grant of regular tax exemption. EPFO head office has received around 30 more such applications after January this year.
Jalan, who is also heading the committee, said that the panel would take up more such applications in the next meeting which may be called in next fortnight.
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.
According to an official, if the deadline for getting regular tax exemption is not extended in the full-fledged budget to be presented by the next government after the
general elections then the defaulting trusts would come under the income tax net.
At present, the EPF subscribers are exempted from paying income tax on deposits, accrual of interest and withdrawal of their funds.
Meanwhile, the EPFO has made it mandatory for all such trusts to file their returns online from April 1, 2014.