Friday, April 24, 2015

PF locked for five years and taxed while foreign investors get SIX Billion dollar tax holiday! Celebrate May Day against this Fascist Anti National Hindu Imperialism!

PF locked for five years and taxed while foreign investors get SIX Billion dollar tax holiday!
Celebrate May Day against this Fascist Anti National Hindu Imperialism!

Palash Biswas

Celebrate May Day against this Fascist Anti National Hindu Imperialism!

PF locked for five years and taxed while foreign investors get SIX Billion dollar tax holiday!

Withdrawal of Provident Fund may attract Income Tax. The Income Tax Department recently told EPFO (Employees Provident Fund Organisation) to deduct Tax (TDS) from the withdrawal amount, if the withdrawal happened before completing five years of subscription. Tax officials have cited a rule in the 1961 Income-Tax Act that taxes PF withdrawals by employees before completing five years of contributions into the EPF is taxable. - See more at:

We have been asking every worker,employee and every citizen of India yto unite andcelebrate May Day to oppose the hindu imperialist zionist business frinedly corporate monopolistc agreession against the people of India mass for mass destruction.Some sections of the masses are not quite conviced as they believe that good days would enhance thtrickling trickling exclusive creamy PPP deveopment for their elite class.The emplyees believe they are quite different and have to do nothing with the toiling masses, the workers,the HAVE NOTs.The so called Hevaes,the white color emplyees,the small and medium class in business as well as industry have to bear the burns of the super Volcanic free market economy of the emerging market,virtually the joint peripherry of US imperialsim and Zionist Israel ruled by the antinational religiuos fscist remime.

The tax department will rule within a month on alternative tax claims made against foreign investment funds that are covered by tax treaties, the finance ministry said, as the government moves to defuse its latest tax row with investors.

Foreign investors in India previously paid 15 percent on short-term listed equity gains, 5 percent on gains from bonds, and nothing on long-term gains. However, from late 2014 many firms received notices demanding payment of a so-called minimum alternative tax (MAT) on past income.

Indian Express reports:The government on Wednesday assured over 1,000 foreign institutional investors (FIIs) across the United States, Hong Kong and Singapore they can avail of treaty benefits to ward off tax demands on capital gains booked over the years till March 31. The development is significant given the uproar among foreign investors following around 90 tax notices slapped on FIIs by the revenue department.

Tax Guru explians:In most cases, the accumulated PF balance is withdrawn at the time of retirement, and therefore, not taxable in the hands of the individual. However, in certain cases like change in employment, an individual may even withdraw the PF balance earlier. The point one needs to remember is that the amount received from such PF is not exempt from tax in all cases. Only under the circumstances listed below will the amount withdrawn from PF be eligible for such exemption from tax.

If the employee has rendered continuous service with the employer for five years or more. Again, if the balance includes amount transferred from the individual's PF account maintained by previous employer(s), then the years of continuous service rendered to the former employer(s) would be included for the purpose of computing the five-year period.

If the employee has not rendered continuous service of five years, but the service is terminated by reason of the employee's ill health or discontinuance of the employer's business or reasons beyond the control of the employee, the amount will be tax-exempt.

Another tax-exempt case is when, on the cessation of the employment, the employee finds another job and the the accumulated PF balance is transferred to his individual PF account maintained by the new employer.

In short, where the PF amount is withdrawn before five years of continuous service, it may be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions. In such a case, payment received by the individual in respect of the employer's contribution along with the interest accrual thereon is taxed as "salary". Interest on the employee's contribution is taxable as "other income". Payment received in respect of the employee's own contribution is exempt from tax (to the extent not claimed as a deduction earlier).

While finance minister Arun Jaitley announced in the Budget that FIIs will not be required to pay minimum alternate tax (MAT) from April 2015, the tax department sent notices to FIIs claiming tax worth $6.4 billion for past capital gains. About 41 percent of investment into the Indian capital market happens through these countries.

The ministry, led by Minister of State for Finance Jayant Sinha, along with Revenue Secretary Shaktikanta Das and CBDT Chairperson Anita Kapur told the FIIs in an international conference call they can invoke the double taxation avoidance agreement (DTAA) to escape the tax demand.

"This means that FIIs from Singapore and Mauritius will not have to pay the tax as these countries have DTAA with India, while they have zero capital gains tax," an official told The Indian Express. "We will also clarify if minimum alternate tax (MAT) would be levied prospectively from April 1 on other incomes like interest on bond, private equity and foreign direct investment. This clarification can be expected soon," the official added.

Essentially the Indian authorities said the definition of permanent establishment as defined in the tax convention would help foreign investors. The MAT demand is applicable only on foreign investors deemed to have a permanent establishment in India. The ministry's clarification means those entities claiming an establishment in these jurisdictions will escape the tax net.

Meanwhile, capital market regulator, Securities & Exchange Board of India (Sebi), too, has conveyed to the revenue department its concerns on the tax demands. The regulator's concerns are that the demands can create a negative sentiment among the FIIs. These have been conveyed to the department of economic affairs in the finance ministry, which has also supported them.

While reiterating the government's commitment to a non-adversarial tax regime, the Centre claimed the MAT for foreign portfolio investors is a legacy issue, currently sub-judice and therefore can't be dealt with retrospectively. The CBDT chairperson told the FIIs that assessing officers have been instructed to "pass orders very quickly" in cases where notices have been sent. "As per the existing law, it was necessary to send the notices. However, when they are taken up, they may get quashed," the official said.

Sameer Gupta, tax leader for financial services, EY said, "This is indeed a positive announcement. While re-assessment proceedings have been initiated, it would mean that if these announcements are given effect to, MAT should not apply to treaty protected cases."

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