Registration of 19,000+ Illegal Layouts Halted in Andhra Pradesh

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The Andhra Pradesh state’s Directorate of Town & Country Planning (DTCP) has put the registration of more than 19,000 illegal layouts on hold in the state. All these illegal layouts which were put on hold have been declared as ‘illegal layouts’ as they laid out without following the issued guidelines & without acquiring the necessary clearances, this means that the transactions of more than 19,000 plots which include layouts located in both rural & urban areas were stalled as the registration of the layouts cannot go through without the state govt.’s approval.

The total area of land marked as these illegal layouts is said to exceed 1 lakh acres. The state government announced that it would allow registrations only after payment of regulatory fees & if the necessary corrections are made to the illegal layouts to adhere to the prescribed rules. The town & country planning department of the state has circulated the details of the unauthorized layouts to the offices of the registration & stamps department to ensure the registration of these illegal layouts is stalled.

The commissioner of the registration & stamps department had recently issued a circular which was a directive to immediately cease registrations in unauthorized layouts due to which there was widespread confusion in the state. Many buyers in the state who had already purchased property in the unauthorized layouts were worried after the sudden halt for registration of these illegal layouts, their transactions were stopped mid-way with no certainty about them getting their property or their investment back.The state govt. clarified that the registrations will continue for plots in layouts which were purchased before the cut-off date i.e., 7th January 2020. The builders & developers in AP said they were not happy with the decision of the government to stop registrations for all these illegal layouts. The builders & developers complained that the guidelines issued were unclear and confusing to implement for small & medium sized projects. The state govt. has said that the rules prescribed for these layouts were decided to ensure better development & for future proofing of the layouts and that registrations won’t be permitted unless the development guidelines were adhered to.

EPFO to Raise Monthly Wage Ceiling to ₹21,000

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The Employees’ Provident Fund Organization (EPFO) is planning to increase the wage ceiling to ₹21,000 per month from the existing ₹15,000 per month. A high-level committee of the EPFO has backed the proposal to increase the monthly salary ceiling to ₹21,000. The high-committee suggested that the central govt. implement the new ceiling of ₹21,000 per month at a later date after considering all factors and inputs involved in the change. The implementation of the proposal will add an additional 75 lakh employees eligible to be covered by the EPF scheme.

The previous revision to increase the monthly salary ceiling was done in 2014. A senior government official said “The ad-hoc committee on EPFO coverage has agreed to enhance the EPF Act to align with ESI establishment.” The delay in implementation could help employers who would have faced higher cost & compliance burden due to a sudden increase in the monthly salary ceiling. The govt. will also not be required to make additional provision under the EPS and employees earning more than ₹15,000 can choose to not be covered by the EPFO.

If the suggestion of the high-committee is accepted by the Central Board of Trustees (CBT) of EPFO, then the employers will get some time to plan their finances as they were reluctant to immediately increase the financial burden caused by employer’s contribution to employees’ EPF fund. The Centre currently pays around ₹6,750 crores every to the Employees’ Pension Scheme (EPS) of the EPFO which means the government contributes 1.16% of the total basic wage  of EPFO subscribers towards the EPS.

How New Income Tax Rules Affect Interest on EPF Savings

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Earlier in the month of March, the Employees’ Provident Fund Organization (EPFO) announced that the interest rate on Employee Provident Fund (EPF) accumulations in the members’ accounts would be 8.1% for fiscal year 2022-23. The interest on EPF for FY 2021-22 was fixed at 8.5% which means the interest rate has been cut by 0.4% and it is the lowest interest rate fixed by the EPFO since 1977. The interest on EPF was completely tax free for provident fund contributors until changes were introduced in the 2021 Budget which came into effect on 1st April 2021 according to which interest on EPF contribution beyond a specified threshold will be taxable.

To make calculations easy, separate accounts within the provident fund shall be maintained from 2021-22 onwards for taxable & non-taxable contributions made by a person. In other words, the provident fund office or the employee PF trust, will maintain two accounts for this purpose: One with contribution within the threshold and the other (second) for contribution over the threshold.

How New Income Tax Rules Will Affect EPF Interest:

  • According to the new rules introduced by the Income Tax Department, interest credited to the provident fund account of an employee will be tax free for contribution of ₹2.5 lakhs every year & interest on employee’s contribution exceeding ₹2.5 lakhs shall be taxed to the employee every year. If the employer doesn’t contribute to the provident fund of the employee, then the threshold applicable will be up to ₹5 lakh of employee’s contribution.
  • The ₹5 lakh threshold will cover nearly 93% of EPFO subscribers who will continue to receive tax-free interest on their contribution according to the interest rate fixed by the EPFO
  • Generally, the employer contributes 12% of the basic salary plus dearness allowance to the EPF account of the employee and another 12% is deducted from the employee’s pay as employee’s contribution. 8.33% of the 12% contribution made by the employer goes towards the Employees’ Pension Scheme (EPS) which earns zero interest.
  • The interest on excess contribution will be taxable and not the excess contribution itself. The excess contribution will be made by the employee from their salary which is already taxed and thus is not taxable again.
  • Balance standing to the credit of an employee as on 31st March 2021 is concerned, interest on this non-taxable account will continue to remain tax free.
  • Only the interest on the second/taxable account will be taxed every year.
  • For the second/taxable account, it is not only for the year of contribution but also for all the subsequent years that the interest will become taxable.

New PF Account Rules Effective from 1st April 2022

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Employees who donate a portion of their savings to their fund each month are enrolled in the Provident Fund, which is maintained by the government. Anyone who has put money into it can take money out after they reach the age of 60, or even before. However, there are a few important conditions and guidelines to follow if a person wants to withdraw money from their EPF account before retirement.

Interest on EPF was totally tax-free prior to Budget 2021. Finance Minister Nirmala Sitharaman proposed in her budget address for 2021-22 that PF payments of more beyond Rs 2.5 lakh per year be taxed. The Central Board of Direct Taxes (CBDT) has issued new guidelines that outline how the interest on an employee’s provident fund contribution that exceeds a specific level is taxed. Employee Provident Fund (EPF) payments over Rs 2.5 lakh per year would be taxed, according to a notification published on August 31. This limit will be Rs 5 lakh per year for PF accounts when employers do not contribute.

The employer contributes 12% of the employee’s base salary plus dearness allowance to EPF and deducts another 12% from the employee’s pay; 8.33% of the employer contribution goes to the Employees’ Pension Scheme (EPS), which pays no interest. Interest on non-taxable accounts will continue to be tax-free until March 31, 2021. Every year, the interest on the taxable account will be taxed. All PF accounts must now be divided into two accounts: one for the taxable contribution and interest earned on that component, and another for the non-taxable contribution.

The New PF Rules Coming into Effect from 1/4/22

  • Existing PF accounts will be divided into taxable contribution accounts and non-taxable contribution accounts.
  • Non-taxable accounts will also include their closing account, which has a March 31, 2021 expiration date.
  • The new PF rules will be in effect beginning with the next fiscal year, on April 1, 2022.
  • A new section 9D has been added to the IT rules to impose a new tax on PF income from employee contributions exceeding Rs. 2.5 lakh per year.
  • In addition, two separate accounts will be created within the existing PF account to calculate taxable interest.

Steps to Transfer Amount from EPFO to Employer’s Trust

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When employees change jobs and move their EPF account with the previous employer to the new employer, they were not sure if they could transfer the EPF account to the private trust of the new employer. Now, subscribers of the Employees’ Provident Fund Organization (EPFO) can now transfer their EPF account from the old employer to the private provident fund trust of the new employer as an option. The EPFO rules state that an individual can easily transfer their EPF account held with old employer to new employer irrespective whether the previous or new account was/is held with trust or EPFO.

An EPF member not only transfers money from an old EPF account to a new EPF account, he/she also transfers details related to Employees’ Pension Scheme (EPS) account to new employer. the money deposited by the employer (old and new) in the EPS account is deposited to the EPFO and at the time of transfer, this lies with the EPFO and pension is paid to the individual when they become eligible. Transfer of EPF account can be done online provided both the employers (old and new) are able to initiate transfers though unified portal. HoEPF account transfer from EPFO to employer’s EPF trust.

If the details of a particular company or trust is not available on the Member Sewa portal, then employee has to fill Form 13 manually and submit the same to his/her HR department. An individual must check that their EPF account is KYC compliant, Universal Account Number (UAN) is linked to Aadhaar number and mobile number linked with EPF account must be linked with Aadhaar number, before starting the transfer process.

Steps to Transfer EPFO Account to Employer’s Trust & Vice-Versa

  • Login to your member account on the EPFO Member Seva portal by entering UAN & password
  • After logging in, select ‘Online Services’ & select ‘One Member-One EPF Account (Transfer Request)’ option
  • A new tab will be displayed where the fields of details for the new EPF Account to transfer funds will be shown. Enter your new EPF A/c no. which is generally displayed on salary slip or EPF statement from employer.
  • Option for attestation of online transfer to be done by current or previous employer will be displayed, check with new employer if you can choose them for attestation of EPF account transfer and select current employer for attestation.
  • Enter Member ID/Previous EPF A/c no. or UAN if both old & new employer are same or UAN of old employer if new employer is different. Click on ‘get details’ & details of EPF account will be displayed and select the account from which money has to be transferred to new account.
  • Click on ‘Get OTP’ for OTP confirmation process & enter the OTP received on your Aadhaar linked mobile number, click submit after entering correct OTP and the transfer request will be submitted.

Generally, EPF transfer takes 30 to 45 days to complete. Once the EPF transfer is successfully completed, old EPF account employer (EPFO/Trust) will issue Annexure K in two copies – One copy will be given to the employee and another copy will be given to the new employer (trust/EPFO).

EPFO Asks Companies to Encourage & Complete E-Nomination of Women Employees

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The Employees’ Provident Fund Organization (EPFO) has asked employers registered with EPFO to encourage & allow 100% e-nomination of women employees in order for the employer company to be recognised & awarded on International Women’s Day (8th March). As per an EPFO statement tweeted on Twitter, companies which have filed an e-nomination for the months of December 2021 & January 2022 are eligible for this benefit. “We urge all establishments to facilitate 100% eNomination of Women employees and get recognised and rewarded this InternationalWomensDay” – the tweet by the EPFO stated.

Another EPFO tweet reads “On this InternationalWomensDay, we urge Women members to file eNomination and empower family and assure them Social Security.” The EPFO has been encouraging women to file their e-nominations so that the families of working women can avail the benefits and also women EPFO subscribers can receive good interest amount on their retirement & provident funds. EPF subscribers can make changes to their nominations online. An EPF member does not need to request this from their employer; instead, they can update their EPF nominations online through the EPFO UAN portal. 

Here’s how an EPF subscriber can add/change their nominee details online through the EPFO website:

  1. Head to the EPFO official website at – https://www.epfindia.gov.in/
  2. Go to the ‘Services’ section and select ‘For Employees’ tab
  3. Login with your registered mobile number/OTP/UAN and password
  4. Under the ‘Manage’ section, choose ‘e-Nomination’
  5. Select ‘Yes’ option to update family details & declaration
  6. Select ‘Nomination Details’ to enter valid fields & declare total amount of share to nominee
  7. Click on ‘Save Nomination’ after declaration is completed
  8. Click on the ‘E-Sign’ link to receive OTP on registered mobile number
  9. You will receive a One-Time Password (OTP) on the mobile number linked to your UAN & Aadhaar
  10. Submit correct OTP, now you have finished the e-Nomination process successfully without any need for physical document or form submission

EPFO Interest Rate Slashed to 8.1% for 2021-22

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The Employees’ Provident Fund Organization (EPFO) has slashed interest rate on provident fund deposits down to 8.1% for 2021-22 from 8.5% credited for 2019-20 & 2020-21. The 8.1% interest rate is the lowest interest rate the EPFO has fixed in 40 years. The lowest interest rate previously was 8% for 1977-78, which is 45 years ago and the interest rate had always been 8.25% or more since then till 2021-22. The decision was made during the Central Board of Trustees’ (CBT) meeting held in Guwahati on Saturday.

The interest rate is decided based upon the EPFO’s estimated income for the year which is said to be ₹76,768 crores, this will leave the EPFO with a surplus of ₹450 crores and the drop in interest rates is said to affect the earning for more than 6 crore EPFO subscribers. AK Padmanabhan, a member of the CBT of EPFO, said “The falling interest rate is a big disappointment to millions of EPFO subscribers. Total economy is in distress and the fall in interest rate is a reflection of that.” Had EPFO maintained the existing interest rate of 8.5%, the retirement fund body would be left with a deficit of ₹3,500 crores.

“Keeping in mind the global situation and the equity market, maintaining a balance of investment with social security is our priority. We can’t opt for high-risk instruments,” Labour Minister Bhupender Yadav said “We are not market makers but in the market for stability and that’s why the board has recommended the interest rate of 8.1% which is as per our estimate,” the minister added. The decline in interest rate has been attributed to the volatility of the stock market and the Russia-Ukraine crisis which has affected earnings of the EPFO’s investments.

K.E. Raghunathan, a member of the CBT said “This year the earning has been about Rs 76,000 crore out of which Rs 5,800 crore is from ETFs which we diluted before the war. This has helped us get some decent return. While other funds have given 6.8%-7%, the interest rate of 8.1% is decent and should be appreciated.” The EPFO’s corpus fund has increased from ₹8.29 lakh crores in 2020-21 to ₹9.4 lakh crores in 2021-22. The Ministry of Finance will now evaluate and vet the interest rate announced by the CBT of EPFO before it becomes notified.

The final interest will be credited into the subscribers’ accounts after the interest rate has been notified which generally happens around Diwali. The EPFO will begin crediting the interest amount around Diwali and will go on till January of next year for every active subscriber’s account to be credited with the interest amount. The finance ministry has been pushing the labour ministry to lower the interest rate on provident deposits to make them on par with other small saving schemes.

Why EPF Slashed Interest Rates for 2021-22?

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The Employees’ Provident Fund Organisation (EPFO), recently, slashed interest rates on provident fund (PF) deposits for 2021-22 from 8.5% to 8.1%, the lowest in over four decades. Mint explains the logic behind the decision. The EPFO was established by the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. It aims to provide provident fund (PF) for workers in Indian factories and establishments where at least 20 people are employed. The contribution towards PF aims to take care of a person’s post-retirement needs and the investments are government-backed. The EPFO comes under the labour ministry and is administered by a tripartite board—the Central Board of Trustees—which has representatives from the government, employers, and employees. It has more than 60 million active subscribers.

To be able to pay interest, income must be generated through appropriate investments. As per the guidelines and to ensure that the Trust’s money is safe and offers optimum returns, it is mandated to invest 85% of its corpus in debt instruments and 15% in equities. With interest rates on fixed deposits on an average hovering around 5-5.5%, national savings certificate at 6.8%, and public provident fund offering 6.8-7%, it was only logical to expect that interest rates on PF will be brought down. In case of earnings falling short of declared interest rates, the government would need to subsidize the same.

Lower interest rates will adversely impact those who bank on their PF deposits to accumulate retirement fund. However, it is also important to bear in mind that with interest rates on an average being on a declining trend, high rates maintained by the EPFO have been questioned. PF interest rates should be reflective of the state of the Indian and global economy. Due to the pandemic, the fiscal deficit for 2021-22 has doubled to 6.9% of gross domestic product (GDP). India might end the year with a wider fiscal deficit and economic growth numbers might have to be revised, with the Russia-Ukraine war driving up crude oil and commodity prices and leading to supply chain disruptions. In this background, increased PF subsidy means greater government borrowing and pushing interest rates up, the consequence of which ultimately will be cost-push inflation.

Countries like India with a comparatively weak social security system, the importance of returns on savings cannot be ignored. There needs to be a balanced approach towards risk and returns. Exposure to investment by the EPFO in equity shares may be raised up to 50%. An option could be offered to the employees in terms of risk exposure. There could be different schemes where employees are given the opportunity to choose.

Union Govt. Forms 4 Panels to Analyze EPFO Functioning

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The Union Government of India, has taken the decision to create 4 specific board-level committees to analyze and delve into the functioning of the Employees’ Provident Fund Organization (EPFO). Each of the 4 new committees will take a peep under the hood of how different aspects of the EPFO function which are – establishment related issues, futuristic implementation of social security, digital capacity building & pension related issues. The new committees or sub-committees will look into the aforementioned aspects of EPFO functioning.

The formation of these panels was approved by the chair of the Central Board of Trustees of EPFO Bhupinder Yadav who is also the Union Minister of Labour & Employment. The newly approved committees have been notified on 27th November and they have a tenure of 3 months. Currently, the EPFO handles a fund of more than ₹15 lakh crores of retirement savings.

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The 2 committees which will be inspecting the functions of the EPFO with regard to ‘Pension Related Issues/Reforms and ‘IT & Communication’ will be led by Labour Secretary Sunil Barthwal, who was in charge of the EPFO as Central PF Commissioner until late September of this year. An 8-member panel has been instructed to submit a report for suggestions on matters pertaining to pension reforms for universalization of social security. There already exists a board-level committee to review, modify & better the Employees’ Pension Scheme (EPS) of 1995.

The EPS & EDLI (Employees’ Deposit Linked Insurance) Implementation Committees are usually headed by the CPFC. Meanwhile, the committee appointed to look into IT & Communications to build the digital capacity of EPFO comprises of 10-members and it has been asked to provide solutions to improve service delivery for EPFO members. The committee assigned to look into building digital capacity of the EPFO is also tasked with finding solutions for effective media & communication with stakeholders.

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The 2 other committees will be headed by Rameshwar Teli who is the Minister of State for Labour & Employment. The committees will be dealing with the workings of the establishment aspects, internal human resources and ways to improve EPFO coverage, decreasing related litigation issues. There will be a keen interest in the proceedings of the inspection of the human resources committee as there were hurried transfers & appointments for more than 100 senior EPFO officials in July this year.

 Today Last Date of EPFO Deadline to Link UAN to Aadhaar Numbers

The EPFO had originally postponed the deadline for members to link their Aadhaar card nos. to their UAN (Universal Account Number) from 31st August 2021 to 30th November 2021. The move to link Aadhaar number with the UAN was made necessary this year after a revision to section 142 of the Code of Social Security 2020.

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“In partial modification of the Circular No. WSU/15(1)2019/ATR/529 dated 15.06.2021 under reference, it is informed that the date of completing the seeding and verification of Aadhaar with UAN, is hereby extended till 30.11.2021 and accordingly, the date in Para 1 of the referred Circular dated 15.06.2021 mentioned as 01.09.2021 may be read as 01.12.2021,” stated in a statement made public by the EPFO on 15th November 2021.

The consequences of not linking UAN with Aadhaar number are many but the primary one would be the member will not receive employer’s contribution. The requirements for filing Electronic Challan Cumulative Return have also been modified by EPFO, saying the company can only file for employees who have linked UAN to Aadhaar number. Employers can apply for a separate ECR for non-Aadhaar seeded UAN once the Aadhaar seeding procedure is finished. Most employees will face payment delays in their account till the data is approved by employers & authorities and will also be incapable of withdrawing PF funds from their accounts.

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The EPFO is also proposing to open membership to previous members who have exited the scheme with a minimum contribution of ₹500 per month which could benefit citizens who have just lost their job or moved jobs from formal sector to a job in the informal sector voluntarily. The EPFO is currently working on a system to allow previous members of the EPFO re-join by paying a monthly contribution of ₹500 or 12% of their monthly income.

The EPFO is analysing the effect this new scheme could have on the EPS, EPF & EDLI schemes, post which the above scheme will be finalised. The Social Security Code 2020 allows the EPFO to add new schemes to its offerings. The introduction of this new scheme could greatly benefit individuals have a retirement corpus fund, avail fixed returns at higher interest rates while also leading to growth of the EPFO fund and number of EPFO members.

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EPFO Begins Crediting Interest to PF Accounts, 4 Ways to Check PF Account Balance

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The Employees’ Provident Fund Organization (EPFO) has begun crediting the interest garnered on its fund investments for this year. After the 229th meeting of the Central Board of Trustees on 20th November where a lot of major decisions were made. The interest rate on the PF account investments was maintained the same as it was at 8.5% for the financial year 2020-2021.

The EPFO began crediting the accounts of the PF account holders after the board meeting. The EPFO has to credit the interest for more than 25 crore accounts of EPFO members. EPFO members can check their PF account balance easily and in 4 easy ways. The 4 methods to check PF account balance are mentioned below:

Missed Call – PF account holders or members of the EPF can check their account balance by just giving a missed call at 011-22901406 from their registered mobile number linked to their UAN (Universal Account Number).

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  1. Via SMS – EPFO members can check their account balance via SMS too – they only need to text an SMS from their registered mobile number linked to their UAN in the format given below
  2. Text EPFOHO <UAN> <LAN> to 7738299899
  3. UAN is the member’s Universal Account Number and LAN is the first 3 letters of choice of language – ENG for English, HIN for Hindi etc.
  4. The balance message will be available in 9 languages – English, Hindi, Bengali, Tamil, Gujarati, Marathi, Telugu, Malayalam, Kannada and Punjabi.
  • Umang App – EPFO members can also view their PF account number via the Umang app. Members just need to install the Umang app from the Google Play Store or Apple App Store and then login using their UAN & OTP sent to their registered mobile number, after logging-in, members can directly view their PF account balance.
  • Through EPFO website

EPFO members can check their balance via the EPFO website too

  • Head to the official EPFO website at epfindia.gov.in
  • Select the ‘Services’ tab and click on the ‘For Employees’ link
  • Members must sign-in using their UAN & OTP (One-Time Password)
  • After signing-in they can view their account balance in the ‘Member’s Passbook’ section if the UAN has been activated by the employer.
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