TOPIC : GS 3 Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
What are the new I-T rules on PF savings?
- The Finance Ministry notified new Income Tax rules to impose a fresh tax on Provident Fund (PF) savings.
- In the 202122 Budget speech, Finance Minister proposed taxing the income on PF contributions of over 2.5 lakh a year.
- This limit was later enhanced to 5 lakh for PF accounts wherein employers make no contributions.
- There was a lack of clarity on how this tax was to be levied and the new rules seek to address it
What is the government’s rationale behind the move?
- The provision aimed at ensuring people retire with an adequate nest egg was being misused
Which PF accounts will be affected?
- EPF accounts managed by the Employees’ Provident Fund Organisation (EPFO) and the General Provident Fund (GPF), where government employees save for retirement, will be impacted.
- There are large companies that manage the retirement savings of their workforce inhouse through ‘exempt’ EPF trusts
- Public Provident Fund (PPF) accounts are not affected by the new tax, nor are retirement savings accumulated under the NPS.
- EPF accounts are mandatory for employees earning up to 15,000 a month in firms employing over 20 workers, with 12% of the basic pay and dearness allowance deducted as employees’ contribution and another 12% remitted by the employer.
- Government as well as private sector employees are allowed to make voluntary contributions over and above the statutory deductions into the GPF or the EPF respectively.
- The 2.5 lakh annual contribution limit shall apply to EPF members, while in the GPF or other PFs wherein there is no contribution from the employer, the threshold has been set at 5 lakh
What do the new IT rules say about levying the PF tax?
- For calculation of taxable interest relating to contribution in a provident fund or recognised provident fund, exceeding the specified limit, a new Rule 9D has been added.
- The rule requires all PF accounts to be split into separate accounts one with the taxable contribution and interest earned on that component,
- The other with the nontaxable contribution that shall include the closing balance of the PF account as on March 31, 2021, and all fresh nontaxable contributions and interest thereon.
- While the government has said this will help arrive at the taxable PF income for a year, it is still not clear if the tax has to deducted from the EPF account concerned or the taxable part added to one’s total income at the time of filing returns.
- The proposed solution to create two accounts seems to suggest that the EPFO and PF trusts may have to deduct tax on the income earned on the ‘taxable contribution’ of the EPF account and remit it to the exchequer each year.
- Maintaining two separate accounts is an onerous requirement for the EPFO and the trustees of the other PFs to comply with.
Way Forward
- About 5 crore of these members were active contributors to their EPF accounts during 201920.
- Even if a technological solution is devised to rejig the existing systems and provide for two EPF accounts for each member, there are other concerns.
- Deducting tax at source would require the EPFO or the trustees of individual PFs to issue tax deduction certificates or IT Form 26 AS for all such members.
- The EPFO, India’s largest retirement fund manager with around 15 lakh crore of assets, was consulted over the rules or is prepared for the transition to the proposed system, is not known at this point.
Mains Question
Why has the government decided implement a fresh tax on Provident Fund contributions? Has the limit been raised?
PRELIMS PUNCHERS
- The Delimitation commission
It is Boundary commission of India is a commission established by the Government of India under the provisions of the Delimitation Commission Act. The main task of the commission is redrawing the boundaries of the various assembly and Lok Sabha constituencies based on a recent census. The representation from each State is not changed during this exercise. However, the number of SC and ST seats in a state are changed in accordance with the census. The present delimitation of constituencies has been done on the basis of 2001 census under the provisions of Delimitation Act, 2002.
The Commission is a powerful and independent body whose orders cannot be challenged in any court of law. The orders are laid before the Lok Sabha and the respective State Legislative Assemblies. However, modifications are not permitted. Delimitation commissions have been set up four times in the past 1952, 1962, 1972 and 2002 under Delimitation Commission Acts of 1952, 1962, 1972 and 2002. The union government had suspended delimitation in 1976 until after the 2001 census so that states’ family planning programs would not affect their political representation in the Lok Sabha. This had led to wide discrepancies in the size of constituencies, with the largest having over three million electors, and the smallest less than 50,000
- Mutualism
It describes the ecological interaction between two or more species where each species has a net benefit. Mutualism is a common type of ecological interaction. Prominent examples include most vascular plants engaged in mutualistic interactions with mycorrhizae, flowering plants being pollinated by animals, vascular plants being dispersed by animals, and corals with zooxanthellae, among many others. It can be contrasted with interspecific competition, in which each species experiences reduced fitness, and exploitation, or parasitism, in which one species benefits at the “expense” of the other.
The term mutualism was introduced by Pierre-Joseph van Beneden in his 1876 book Animal Parasites and Messmates to mean “mutual aid among species”. It is often conflated with two other types of ecological phenomena: cooperation and symbiosis.Symbiosis involves two species living in close physical contact over a long period of their existence and may be mutualistic, parasitic, or commensal, so symbiotic relationships are not always mutualistic, and mutualistic interactions are not always symbiotic. Despite a different definition between mutualistic interactions and symbiosis, mutualistic and symbiosis have been largely used interchangeably in the past, and confusion on their use has persisted.
- Heterosis
It is also called outbreeding enhancement is the improved or increased function of any biological quality in a hybrid offspring. An offspring is heterotic if its traits are enhanced as a result of mixing the genetic contributions of its parents. These effects can be due to Mendelian or non-Mendelian inheritance.
It is often discussed as the opposite of inbreeding depression, although differences in these two concepts can be seen in evolutionary considerations such as the role of genetic variation or the effects of genetic drift in small populations on these concepts. Inbreeding depression occurs when related parents have children with traits that negatively influence their fitness largely due to homozygosity. In such instances, outcrossing should result in heterosis. Not all outcrosses result in heterosis. For example, when a hybrid inherits traits from its parents that are not fully compatible, fitness can be reduced. This is a form of outbreeding depression.
- Green Status of Species Define Recovery
A species is fully recovered if it is present in all parts of its range, even those that are no longer occupied but were occupied prior to major human impacts/disruption. It is viable (i.e., not threatened with extinction) in all parts of the range and It is performing its ecological functions in all parts of the range
These factors contribute towards a “Green Score” ranging from 0–100%, which shows how far a species is from its “fully recovered” state. This definition of recovery is ambitious by design. It is not expected, nor is it a goal that all species will eventually fulfil this definition of full recovery for many species, large areas of range have been irreversibly converted for human uses. Instead, this definition serves as a way to standardize the assessment approach between species, and to identify areas of opportunity in the context of what has been lost. It is important to note that any species can be assessed using the Green Status method, including species that have been very negatively impacted by humans and species that are not considered to have been impacted much at all.
PRELIMS QUESTIONS
- Which of the following statements is “heterosis”?
(a) It is the hybrid offspring displays diminished parental characters.
(b) The hybrid offspring displays elevated parental characters
(c) The hybrid offspring is sterile.
(d) None of the above
Answer : B
Heterosis
It is also called outbreeding enhancement is the improved or increased function of any biological quality in a hybrid offspring. An offspring is heterotic if its traits are enhanced as a result of mixing the genetic contributions of its parents. These effects can be due to Mendelian or non-Mendelian inheritance.
It is often discussed as the opposite of inbreeding depression, although differences in these two concepts can be seen in evolutionary considerations such as the role of genetic variation or the effects of genetic drift in small populations on these concepts. Inbreeding depression occurs when related parents have children with traits that negatively influence their fitness largely due to homozygosity. In such instances, outcrossing should result in heterosis. Not all outcrosses result in heterosis. For example, when a hybrid inherits traits from its parents that are not fully compatible, fitness can be reduced. This is a form of outbreeding depression.
Qn 2With reference to The Delimitation commission
1.Delimitation commissions have been set up five times in the past
- Orders can be challenged in any court of law
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer : D
It is Boundary commission of India is a commission established by the Government of India under the provisions of the Delimitation Commission Act. The main task of the commission is redrawing the boundaries of the various assembly and Lok Sabha constituencies based on a recent census. The representation from each State is not changed during this exercise. However, the number of SC and ST seats in a state are changed in accordance with the census. The present delimitation of constituencies has been done on the basis of 2001 census under the provisions of Delimitation Act, 2002.
The Commission is a powerful and independent body whose orders cannot be challenged in any court of law. The orders are laid before the Lok Sabha and the respective State Legislative Assemblies. However, modifications are not permitted. Delimitation commissions have been set up four times in the past 1952, 1962, 1972 and 2002 under Delimitation Commission Acts of 1952, 1962, 1972 and 2002. The union government had suspended delimitation in 1976 until after the 2001 census so that states’ family planning programs would not affect their political representation in the Lok Sabha. This had led to wide discrepancies in the size of constituencies, with the largest having over three million electors, and the smallest less than 50,000