Skip to main content

Finance Ministry wants service tax on ESIC

 

The Move Could Increase India Inc's Spending Towards Workers' Health Benefits

 

A SERVICE tax demand on the Employees' State Insurance Corporation (ESIC) may bring the labour ministry and the finance ministry on collision course, less than a year after they locked horns over a similar demand on provident fund payments.


   The revenue department has decided that ESIC, which promises health benefits through one's working life, is liable to pay service tax, a move that could increase cost for India Inc to provide mandatory health cover for workers.


   Over the last couple of months, field formations of the Central Board of Excise and Customs have been issuing service tax demands to ESIC's 600-odd branch offices across the country.


   "We are not running a for-profit activity that can be taxed as a commercial service," said a senior ESIC official at ESIC headquarters in New Delhi. "We are a social security scheme set up under an Act of Parliament," he said, requesting anonymity. He said it would be difficult to put a consolidated number on the tax demand at this stage. ESIC has an annual income of around 4,500 crore with 5.5 crore beneficiaries under its net. ESIC has alerted the labour ministry about the tax demands and sought a policy-level intervention from


the government. This is the second time in less than a year that the ministries of finance and labour are heading for a showdown over taxability of social security schemes. Last November, a service tax demand was raised on the country's largest retirement fund — the Employees' Provident Fund Organisation (EPFO). The demand, originally at around 461 crore, has now been confirmed at over 1,000 crore. While the EPFO is filing an appeal against the demand, it is also creating a contingency plan to shift the tax burden to employers if the demand is upheld.


   Employers currently pay 1.1% of EPF contributions as administration charges, which would go up if service tax becomes applicable. The ESIC is also expected to hike administrative costs paid by employers to factor in service tax.


   Applicable on workers earning up to 15,000 a month, the state-run insurance scheme is financed by contributions from employers and employees. Employers pay 4.75% of wages and employees chip in 1.75%. The ESIC has a large network of hospitals, whose operational costs are shared by the Centre and the states. The scheme is applicable to all factories with 10 or more workers and retail trade establishments with 20 workers or more. There scheme covers 1.43 crore families.

 


Popular posts from this blog

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

Use Mutual Fund SWPs for getting fixed payments

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   Investors time withdrawals optimally to save on tax The systematic withdrawal plan, or SWP, could be called the lesser known cousin of the much talked about and publicised systematic investment plan (SIP). There's yet another cousin — the Systematic Transfer Plan ( STP ). In SIP, you invest a fixed sum of money at regular intervals (monthly/ quarterly) to buy some units of a mutual fund scheme. In SWP, as the name suggests, you do the opposite: You redeem some mutual fund units from your portfolio to get a fixed sum of money at regular intervals (monthly/quarterly/half year/yearly). In SIP, you get a higher numbers of units when the markets are down, and lesser in a buoyant market. In SWP, going by the product logic, you redeem higher number of units when the markets are do...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now