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Unions against taxing savings schemes
January, 05th 2010

The central trade unions will press for shelving of a proposal, that wants to tax withdrawals from savings schemes, including provident funds, at the pre-Budget meeting with Finance Minister Pranab Mukherjee on January 14.

"(The) Finance Minister has invited trade unions for pre- budget consultations on January 14," All India Trade Unions Congress Secretary D L Sachdev told media.

Although the central trade unions are meeting here next week to prepare their charter of demands, he said, "we would definitely raise the issue of Exempt, Exempt Tax (EET) mode for savings schemes".

The draft Direct Taxes Code (DTC), on which the government has invited comments from public, proposed to tax all long-term savings schemes at the time of withdrawal by the subscribers.

Currently, there are no taxes on long-term savings and pension schemes. Besides EET issue, Hind Mazdoor Sabha (HMS) Secretary A D Nagpal said, "We will also demand for higher income tax slabs to provide relief to the working class."

As part of the budgetary exercise, the minister meets the representative of different interest groups like economists, industrialists, trade unions etc to get their views on the budget. The trade unions, Sachdev said, would also press for the creation of a National Security Fund for urorganised workers in the country.

In view of unionists the funds should have a corpus of a size equal to three per cent of Gross Domestic Product of the country for the welfare of these workers.

The other major issue which could rock the meeting, is imposing service tax on the contributions made to the Employees Provident Fund scheme being run by the country's largest retirement fund manager Employees' Provident Fund Organisation (EPFO).

The issue came to light when some months ago, the Central Board of Excise and Customs slapped EPFO with a notice for not paying service tax on the contributions to these scheme. The scheme has around 4.7 crore subscribers across the country.

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