Labour Minister Bandaru Dattatreya said there are around 43 per cent of the total employees in the country are in the unorganised sector and 4.7 crore of them were in the construction sector.
The two instruments serve different purposes and are typically not an “either-or” choice. EPF gives guaranteed returns while NPS has market-linked schemes.
The process of online submission of claims for availing PF withdrawal benefits (Form-19), Pension (Form 10C) and PF Part Withdrawals (Form 31) does away with the employer’s intervention in the process.
All employees need to have only one UAN throughout their working life irrespective of the number of companies they change.
The subscribers of the Employees Provident Fund Organisation (EPFO), will now be able to withdraw up to 90 per cent of their accumulations in their PF account, for purchase of homes. The EPFO has R
Funds in EPFO can be used to buy units in non-governmental as well as governmental housing projects.
"The Employees' Provident Fund Organisation (EPFO) is developing online claims settlement process by receiving application online," Labour Minister Bandaru Dattatreya said in a written reply to the Lok Sabha.
The government believes the methodology may not have truly reflected many reforms, particularly in tax rates and administration, hammering down the overall rankings and creating an impression that India continues to remains a dodgy place to do business in.
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"The package will be finalised in about a week's time. It will be sent for inter-ministerial consultation thereafter, and finally to the Cabinet for its approval," a senior government official told Moneycontrol.
The inclusion of the agenda item of the Central Board of Trustees’ (CBT) to make PF contributions voluntary for the garment and made-up sectors has raised doubts on the government’s long-term intent on provident fund structure.
Investment and personal finance advisors say that both the schemes have their own importance and a salaried individual should ideally split retirement savings between the two competing instruments, preferably in equal proportions.
Taking advantage of tax deductions for investment under section 80C of the Income Tax Act must start with a list of investments already made to avoid unnecessary overinvesting for tax deduction.
So far, furnishing the Aadhaar card has been made mandatory by the government for nearly 34-35 central schemes.
Total service in the present establishment as well as previous establishments is counted for deducting tax at source and therefore, it is advisable to merge all PF accounts, EPFO has pointed out.
Financial planners and experts seem to be in agreement that Equity Linked Savings Schemes (ELSS) is the best investment avenue under Section 80C of the Income Tax Act since it outscores other options in terms of liquidity and returns.
"The Labour Ministry and the Finance Ministry (view) is the same. There is no difference on 8.65 percent rate of interest on EPF. It is in the process and I will pursue it personally," Dattatreya told PTI.
Experts feel NPS continues to be a good retiral product for the salaried segment since it is market-linked and professionally managed.
Employees' voluntary PF (VPF) contribution can be taken right up to 100 per cent of basic pay. However, the employer is not required to match the additional contribution made by the employee.
Taxpayers‘ habit of last minute rush to save tax is often cashed in by the financial instrument providers and advisors to meet their sales target instead of identifying and matching the investor financial needs.
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Government had enough room to cut the rates further, given the sharp deterioration in rates. But it didn‘t. Even after the reduction to 8.65 percent, provide fund savers still have the highest interest rates.
As per projections, while 8.65 percent will leave the EPFO with a slight surplus for the year, an 8.8 percent rate of interest would result in a deficit of around Rs 200 crore, said sources.
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