EPFO may bring 500 small private PF Trusts into its fold
NEW DELHI: Retirement fund body EPFO may bring 500 private PF trusts within its fold whose EPF accumulations are around Rs 1 crore each, or have up to 20 members, for offering better services to those subscribers.
Besides, this will improve monitoring of over 1,000 such trusts which have large subscriber base and manage huge EPF accumulations.
The Labour Ministry is in the process of amending Employees' Provident Fund Scheme 1952, so that large private PF trusts having accumulations can carry on the management of their employees' EPF money and accounts.
"After the amendment in the EPF Scheme, the existing private PF trust having up to 20 members or EPF accumulations of around Rs one crore excluding pension and insurance contributions, would lose their exemption from filing EPF returns. Their trust's funds and accounts would be taken over by the Employees' Provident Fund Organisation (EPFO)," a Labour Ministry source said.
The source added that after amendment to the scheme, these small trusts would be exempted from filing EPF returns for a period of 180 days after which they would lose the exemption.
The source further said that only those firms would be eligible to run PF trusts whose employee strength is at least 500 and EPF accumulations of their employees excluding pension and insurance contributions are at least Rs 100 crore in five years period. The proposal to amend the scheme was approved by the apex decision making body of EPFO, Central Board of Trustees (CBT), headed by the Labour Minister last year.
According to an analysis by the EPFO, there are 1,550 private PF trusts having total subscribers of over 82 lakh employees. These trusts are managing around Rs 3 lakh crore corpus.
Out of these exempted firms or trusts, there are over 500 trusts which are either managing a meagre amount of EPF (up to Rs one crore) or their members are not more than 20.
The EPFO had proposed that since these trusts manage meagre EPF amounts and have few members, they should be taken over by the EPFO for providing host of online and other facilities which they cannot provide to their subscribers.
Earlier, the firms were allowed to operate their own PF trusts so that their employees get better services when accounts and funds were managed manually and the EPFO used to take months to settle claims like EPF withdrawals.
However, as the EPFO is providing a lot of online services like claim settlement, account balance information through SMS, EPF passbook, it would be better that the EPFO manages the money as well as accounts of these small private PF trusts. NEW DELHI: UK'S Cairn Energy, which became the first company to face coercive recovery in retrospective tax action, had created a maze of subsidiaries in a span of just six months to transfer Indian assets, an event that led to a demand of Rs 10,247 crore as dues.
According to documents accessed by PTI, Scotland-based Cairn Energy till 2006 held Indian assets, including the prolific Rajasthan oil fields, through nine Indian subsidiaries.
What followed was creation of layers of subsidiary firms and transfer of Indian assets. The tax department said the company made capital gains out of the restructuring, hence the tax demand.
When contacted, Cairn Energy spokesperson justified the structure, saying the company chose India listing over the option of getting the Indian company listed on UK bourses.
The structure it built had been presented to Sebi, the erstwhile Foreign Investment Promotion Board (FIPB) and the Reserve Bank of India in 2006 in a "transparent" manner.
On June 26, 2006, Cairn first created Cairn UK Holding Ltd (CUHL) and transfered the Indian assets to it. In return, it got 221.44 million shares of CUHL on June 30, 2006. It also got another 29.78 million shares for sale of 29.78 million pound debt on September 1, 2006.
On August 3, 2006, Cairn India Holding Ltd (CIHL) was incorporated in Jersey, Channel Islands -- a tax haven -- as a wholly-owned subsidiary of CUHL. The Indian assets were transfered to CIHL which issued 221.44 million shares to CUHL, UK, on August 7, 2006. CUHL also sold debt of 29.78 million pound to CIHL, for which the Jersey firm issued another 29.78 million shares.
So, CUHL in all acquired 251.22 million shares of CIHL at one UK pound sterling apiece.
Thereafter, CUHL, UK, on October 12, 2006, sold 41.49 million shares of CIHL to newly-incorporated Cairn India Ltd, which transfered to the British firm Rs 5,037 crore for the same.
Three more such share transfers happened between November and December 2006. In all, the four transactions put together, 251.22 million shares of CIHL were sold to Cairn India for Rs 26,681 crore.