Ease of doing business: EPFO plan hits CBT hurdle; here’s why

Retirement fund body EPFO’s plan to engage private sector banks in collection of contributions may not be implemented soon as its apex decision-making body Central Board of Trustees (CBT), in its meeting last week, has decided to examine the proposal threadbare before giving a go-ahead.

EPFO to conduct special drive for reovery of dues
EPFO has specified that the amount outstanding as on September 1, 2016 shall be the opening balance and recoveries made prior to that date shall not be included with recoveries made during the recovery month. (Photo:PTI)

Retirement fund body EPFO’s plan to engage private sector banks in collection of contributions may not be implemented soon as its apex decision-making body Central Board of Trustees (CBT), in its meeting last week, has decided to examine the proposal threadbare before giving a go-ahead.

The proposal, which also requires an amendment to the Employees’ Provident Fund Scheme, 1952, is aimed at accrediting more banks for collection of dues as part of “ease of doing business”, the retirement fund body said in its agenda for the 213th meeting of the central board held on July 8. It wanted to authorise three private sector banks – ICICI Bank, HDFC Bank and Axis Bank – to collect contributions efficiently and to provide hassle-free service to the establishments. “Such a step would cut down float available with the payment aggregator by two days and would lead to an earning of R15 crore annually for EPFO,” it said.

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The EPF Scheme 1952 provides that the commissioner shall deposit the contributions received from the employers electronically through internet banking or any other mode in the Reserve Bank of India or State Bank of India or any other nationalised banks or through PayGov platform authorised for collection in the current account of the EPFO.

Employers can also pay statutory provident fund contributions through the payment aggregator — Bill Desk — as well as direct online payments through SBI. Collections received through the payment aggregator are indirect but settlements are done through in T+3 days and at times, lead to reconciliation issues. However, collections received through internet banking are direct, seamless and efficient, and the contributions are received in T+1 day.

The finance ministry had earlier authorised ICICI Bank, HDFC Bank and Axis Bank to collect taxes on behalf of income tax, customs, excise and service tax departments. Through a policy review in 2012, RBI allowed all private sector banks to handle any central or state government business on a par with public sector banks with a view to enhance the quality of customer service in government businesses through competition.

Amendments to the existing provisions under para 38(1) and para 48 of the EPF Scheme were required to add these banks for collection of provident fund dues and to provide for an enabling provision for authorising other private banks in future. EPFO said that association of more banks would enable it to seamlessly credit payments to the subscribers and to improve its service delivery.

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