This document provides an overview of auditing provident fund trusts in India. It discusses the relevant statutes, the formation and types of provident fund trusts, contributions and investments, audit procedures, settlements, advances, and recent changes. The key points are: provident funds are mandatory retirement plans with equal employer-employee contributions; there are covered trusts under the Employees' Provident Funds & Miscellaneous Provisions Act and excluded trusts approved under the Income Tax Act; and audit procedures include verifying contributions, investments, interest credited, advances given, and compliance with regulations.
Permanent Establishment & Business Connection and it's Impact on Taxability o...DVSResearchFoundatio
Key Takeaways
Understanding Permanent Establishment and Business Connection
Attribution of Profits
Interplay of Permanent Establishment and Business Connection
Illustrations and Judicial Precedents
This ppt was presented at WIRC Annual Regional Conference, 2016 held at Indore. In this presentation, discussion was held mainly in context of how Company Secretaries have contributed to the growth of startups since ages and also dealt with Startup India initiative of the Govt. of India and Key aspects of CSR in context of company secretaries.
Key Takeaways:
Concerns relating to tax treaties and it's taxability
Issues in determination of PE
Considerations for determination of residential status
Implication for cross border work
Permanent Establishment & Business Connection and it's Impact on Taxability o...DVSResearchFoundatio
Key Takeaways
Understanding Permanent Establishment and Business Connection
Attribution of Profits
Interplay of Permanent Establishment and Business Connection
Illustrations and Judicial Precedents
This ppt was presented at WIRC Annual Regional Conference, 2016 held at Indore. In this presentation, discussion was held mainly in context of how Company Secretaries have contributed to the growth of startups since ages and also dealt with Startup India initiative of the Govt. of India and Key aspects of CSR in context of company secretaries.
Key Takeaways:
Concerns relating to tax treaties and it's taxability
Issues in determination of PE
Considerations for determination of residential status
Implication for cross border work
Objectives & Agenda :
Companies can use either equity or debt form to raise capital. Equity can be raised by way of rights issue, bonus issue, private placement, public issue, etc. An offer of securities made to the existing shareholders of the Company is a rights issue. Bonus shares may be issued to the members of the Company out of its free reserves, or securities premium account or capital redemption account. The webinar covers the statutory / practical aspects of rights issue and bonus issue, including caveats relating to such issues.
Key Takeaways:
Provisions governing RPT under Companies Act, 2013, SEBI (LODR), IND AS
Statutory compliances for RPT
Approval requirements for RPT
Disclosures norms for RPT under various statutes
Details as per Companies act and CSR Rule has been presented. Readers as well as users are suggested to read the disclaimer carefully before making any decisions based on this presentation
Key Takeaways:
Methods of funding for investmenr in overseas JV/WOS
Capitalization of export proceeds
Investment in equity of companies registered overseas/rated debt instruments
Acquisition of foreign company through bidding or tender procedure
Impact due to change in residential status - FEMA perspectiveDVSResearchFoundatio
Key Takeaways:
Various bank accounts
ODI and FDI investments
Property held in India and Outside India
Loan transactions
Demat, Insurance policies and PPF accounts
Key Takeaways:
- What is Single Master Form
- Registration in FIRMS Portal
- Structure of FC-GPR
- Procedures and documents required
- Reason for rejection of form
Foreign Investment Promotion Board approves 12 Proposals of Foreign Direct In...Jhunjhunwalas
#FIPB at its meeting held on 19th December 2014 Approves 12 Proposals of #ForeignDirectInvestments amounting to INR 1827.24 Crore or US$ 292.87 Million.
Data was released on 9th January 2015.
FIPB - Foreign Investment Promotion Board. Government of India
#FDI #IndiaInvesting #India #FPI #ForeignPortfolioInvestors #GovernmentOfIndia #ForeignInvestmentPromotionBoard #InternationalInvestors #InvestmentInIndia #IndiaInvestment #Investing #ForeignInvestor
For more Informative posts click:
https://www.linkedin.com/company/jhunjhunwalas
Big Opportunity to become an Independent DirectorCA PRADEEP GOYAL
Independent Directors (ID) are expected to play a significant role at the Board level and be the change agents of corporate governance. Conventionally, Independent Directors have played a monitoring and advisory role. This is the starting point for their effectiveness and requires basic knowledge of statutes (e.g., companies law). However, in order to be the drivers of change in corporate boards, Independent Directors require a set of distinct skills and, most important, the attitude to make independent judgments.
Do you want to be an Independent director? If yes, this presentation is for you which covers-
1. which companies compulsorily required to appoint IDs.
2. How many IDs need to be appointed by listed and unlisted public companies
3. Who can and who cannot be an ID
4. Qualifications to become an ID
5. Compliances required by a person eligible and willing to be appointed as an ID
6. How get empanelment in Independent Directors Databank with IICA
7. Do ICAI permit practising CAs to be appointed as ID?
Objectives & Agenda :
Companies can use either equity or debt form to raise capital. Equity can be raised by way of rights issue, bonus issue, private placement, public issue, etc. An offer of securities made to the existing shareholders of the Company is a rights issue. Bonus shares may be issued to the members of the Company out of its free reserves, or securities premium account or capital redemption account. The webinar covers the statutory / practical aspects of rights issue and bonus issue, including caveats relating to such issues.
Key Takeaways:
Provisions governing RPT under Companies Act, 2013, SEBI (LODR), IND AS
Statutory compliances for RPT
Approval requirements for RPT
Disclosures norms for RPT under various statutes
Details as per Companies act and CSR Rule has been presented. Readers as well as users are suggested to read the disclaimer carefully before making any decisions based on this presentation
Key Takeaways:
Methods of funding for investmenr in overseas JV/WOS
Capitalization of export proceeds
Investment in equity of companies registered overseas/rated debt instruments
Acquisition of foreign company through bidding or tender procedure
Impact due to change in residential status - FEMA perspectiveDVSResearchFoundatio
Key Takeaways:
Various bank accounts
ODI and FDI investments
Property held in India and Outside India
Loan transactions
Demat, Insurance policies and PPF accounts
Key Takeaways:
- What is Single Master Form
- Registration in FIRMS Portal
- Structure of FC-GPR
- Procedures and documents required
- Reason for rejection of form
Foreign Investment Promotion Board approves 12 Proposals of Foreign Direct In...Jhunjhunwalas
#FIPB at its meeting held on 19th December 2014 Approves 12 Proposals of #ForeignDirectInvestments amounting to INR 1827.24 Crore or US$ 292.87 Million.
Data was released on 9th January 2015.
FIPB - Foreign Investment Promotion Board. Government of India
#FDI #IndiaInvesting #India #FPI #ForeignPortfolioInvestors #GovernmentOfIndia #ForeignInvestmentPromotionBoard #InternationalInvestors #InvestmentInIndia #IndiaInvestment #Investing #ForeignInvestor
For more Informative posts click:
https://www.linkedin.com/company/jhunjhunwalas
Big Opportunity to become an Independent DirectorCA PRADEEP GOYAL
Independent Directors (ID) are expected to play a significant role at the Board level and be the change agents of corporate governance. Conventionally, Independent Directors have played a monitoring and advisory role. This is the starting point for their effectiveness and requires basic knowledge of statutes (e.g., companies law). However, in order to be the drivers of change in corporate boards, Independent Directors require a set of distinct skills and, most important, the attitude to make independent judgments.
Do you want to be an Independent director? If yes, this presentation is for you which covers-
1. which companies compulsorily required to appoint IDs.
2. How many IDs need to be appointed by listed and unlisted public companies
3. Who can and who cannot be an ID
4. Qualifications to become an ID
5. Compliances required by a person eligible and willing to be appointed as an ID
6. How get empanelment in Independent Directors Databank with IICA
7. Do ICAI permit practising CAs to be appointed as ID?
EPFO is one of the social security organizations with a large volume of financial transactions taking place in the country.EPF Registration: Registration, Process & Eligibility For Employers and Employees.
Provident fund- Everything you need to knowQuikchex
A descriptive and informative provident fund guide. Presented in a simple and easy to understand format, this guide aims to answer all questions you may have about Provident Fund in India. Visit quikchex.in/blog for more like this.
Employees Provident Fund: Registration Guide for Employees
Epf (suman)
1. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 1
Pioneer eServe Pvt Ltd
Audit of
Provident Fund
Trusts
By
Sushil Kumar Jain, FCA ACS
June 18, 2005
2. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 2
AUDIT OF PROVIDENT FUND TRUSTS
• Introduction
• Formation of PF Trusts
• Audit of PF Trusts
• Recent Changes and Challenges
3. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 3
Introduction
What is a Provident Fund ?
It is a mandatory, tax-qualified, defined,
contribution retiral benefit plan
wherein equal contribution
at the specified rate
is made by the employer and the employee
and the same is payable in lump sum on
retirement.
4. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 4
Introduction
Relevant Statutes are :
Employees Provident Fund & Miscellaneous Provisions
Act, 1952
Income Tax Act,1961
Provident Fund Act, 1925
Indian Trusts Act, 1882
5. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 5
Introduction
Following three Schemes framed under the EPF & MP Act, 1952:
Employees’ Provident Fund Scheme, 1952
- came into force from 1st November, 1952
Employees’ Family Pension Scheme, 1971
- came into force from 1st March 1971
Later replaced by Employees’ Pension Scheme, 1995
with effect from 16th November, 1995
Employees’ Deposit Linked Insurance Scheme, 1976
- came into force from 1st August, 1976
6. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 6
Formation of PF Trusts
Options
Total Compliance with RPFC
Covered Trust for All Members
Excluded Trust for Excluded Employees
with Approval under Schedule IV part A
of the Income Tax Act, 1961
Trusts for Both Covered and Excluded Employees
7. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 7
Formation of PF Trusts
Definition :
"Excluded Employee"
an employee of the Company
to whom both of the following two conditions apply
at the time of the coverage of the Company under the
Employees' Provident Funds & Miscellaneous Provisions Act, 1952
or at the time of his joining the services of the Company,
whichever is later.
i His pay at the relevant time is more than Rs 6500/- per month.
ii He does not have any current PF Balance.
8. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 8
Formation of PF Trusts
An Excluded Employees' Trust is one,
which does not come under the purview of the PF Department,
but its policies are framed based on the PF Act.
The regulatory Statute is the Income Tax Act, 1961.
The rate of contribution by the member can be any amount not
exceeding his basic salary including DA (if any)
The employer can decide to contribute any amount up to 12%.
Employer contribution above 12% is taxable in hands of employees
Employee Contributions eligible for Sec. 88 rebate / 80C
Deduction Interest on Employer and Employee contributions are
tax free
However, withdrawls before completion of 5 years of
membership, become taxable in year of withdrawal with
condtitions.
9. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 9
Formation of PF Trusts
Apart from the financial benefits, some very important
benefits become available to employees who are
members of voluntary PF Trusts in comparison to the
unexempted establishments :
• Easy Availability of advances
• No hassles of Dealing with Public Departments
• Availability of Refundable advances
• Faster transfer of accumulations for outgoing
members
• Faster settlement of final dues
10. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 10
Formation of PF Trusts
Coverage
Establishments employing 20 or more persons and engaged in any
of the 177 industries / Businesses specified.
Co-operative Societies, employing 50 or more persons & working
without the aid of power.
Establishments not coverable statutorily can opt for coverage.
An establishment continues to be covered under the Act,
irrespective of fall in the employment strength.
Since the Act applies on its own force to the establishments, the
employers are required to file the particulars in the specified format
for registration and allotment of business number.
11. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 11
Formation of PF Trusts
When can a company opt to set up an Exempted Trust ?
Covered under the provisions of the PF &MP Act, 1952
Profit making Company
20 employees
Pass a Board Resolution
File for exemption with the RPFC
Apply to the CIT for recognition of PF Trust
On receipt of the approval from RPFC the Trust can
comply as “Exempt”
13. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 13
Formation of PF Trusts
EPS deduction, to be paid to the RPFC cannot be made
from the Employee's contribution.
The EPS deduction of 8.33% can be made only from
the employer's contribution of 12% of Basic and DA.
This is capped at Rs.6500/-
14. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 14
AUDIT OF PROVIDENT FUND TRUSTS
Contributions:
Statutory rate of contribution is 12% of emoluments
(basic wages, dearness allowance, cash value of food concession and
retaining allowances if any,) in the case of 177 establishments.
Rate of contribution shall be 10% in case of the following:
Brick, beedi, jute, guar gum factories, coir industry other than
spinning sector.
Establishments declared as sick undertakings by BIFR.
Matching contribution is to be collected from the employees
Out of 12% (or 10% as the case may be) of the employer’s share of
contribution, 8.33% is to be remitted towards pension fund.
Employer is also required to pay a contribution of 0.5% of the
emoluments towards EDLIS’1976.
15. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 15
AUDIT OF PROVIDENT FUND TRUSTS
Specifics :
• Interest Payment
• Investment Pattern
• Valuation of Securities & Amortisation of Premium
• Settlements during the year
• Advances / Loans
• Meetings
• Submission of Returns
• Health of Securities
16. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 16
AUDIT OF PROVIDENT FUND TRUSTS
The Rate of Interest declared by EPFO
for FY 2003-04 and FY 2004-05
on PF contributions is 9.5% p.a.
An Exempted Trust cannot credit interest
less than the statutory rate of interest stipulated
even if the Trust is not able to earn the minimum interest.
In case of a shortfall, the Company has to make good the deficit.
However, An Excluded Employees' Trust / Private Trust
may declare interest based on the earnings of the Trust.
17. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 17
Investment Pattern prescribed for
Provident Fund Trusts effective
April 1, 2003
25%
15%
30%
30%
Central Govt
State Govt.
PSU
Flexible
18. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 18
AUDIT OF PROVIDENT FUND TRUSTS
Effective April 1, 2005, vide Circular no F.No. 5(53)/2002-ECB&PR
Dated: January 24, 2005
The Trustees, subject to their assessment of the risk-return
prospects, may, if they so decide, divide the total portfolio under
Central and State Government categories into tradable and non-
tradable categories.
Upto 10% of the total portfolio at the end of the preceding financial
year can be treated as tradable and may be used for active
management.
19. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 19
AUDIT OF PROVIDENT FUND TRUSTS
Provided that the tradable portfolio of Government securities shall
be marked to market and mutual funds, which have been set up as
dedicated funds for investment in Government securities, shall be
valued at Net Asset Value at the close of the financial year.
Flexible portion being 30% may be invested in any of the three
categories as decided by their Trustees
Investment may be made in Shares of companies that have an
investment grade debt rating from at least two credit rating
agencies 5%
20. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 20
AUDIT OF PROVIDENT FUND TRUSTS
Valuation of Securities & Amortisation of Premium :
Guidelines in AS 13 cannot apply to PF Trusts
Cost
Face Value
Cost or Market Value whichever is lower
Amortise Premium but not discount
21. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 21
AUDIT OF PROVIDENT FUND TRUSTS
Amortise Premium but not discount
Income exempt
Hold till maturity
Trade
Valued at lower of cost or market value
22. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 22
AUDIT OF PROVIDENT FUND TRUSTS
Settlements during the year
A member may completely withdraw the amount that has accrued in his
account if:
He retires at the age of 58.
He retires – god forbid – because of permanent and total debilitation.
This could be either mental or physical, but must be ‘permanent and
total’ -- the scheme distinguishes between partial and total disabilities.
He immigrates or takes up employment abroad.
His services are terminated because of retrenchment in the company.
He chooses to terminate his service under a voluntary retirement
scheme.
The establishment he works for shuts down.
The organisation he works for shuts down, and he joins one that does
not participate in the EPF scheme.
He can withdraw up to 90 per cent of the amount in his credit in the year
before he retires -- that is, between the ages of 57 and 58.
23. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 23
AUDIT OF PROVIDENT FUND TRUSTS
If an employee brings in a transfer from another approved
Provident Fund Trust or RPFC
then the service rendered with such an ex-employer is
counted.
Settlement can be done only after a waiting period of two
months from the date of resignation
For members going abroad, settlements can be done
immediately
Settlements are immediate in case of female members
who resign from the services for the purpose of getting
married.
24. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 24
AUDIT OF PROVIDENT FUND TRUSTS
TDS on settlements
Any payment received from a Statutory Provident Fund,(i.e. to which the
Provident Fund Act, 1925 applies) is exempt.
Any payment from any other provident fund notified by the Central Govt.
is also exempt.
The Public Provident Fund(PPF) established under the PPF Scheme,
1968 has been notified for this purpose.
Besides the above, the accumulated balance due and becoming payable
to an employee participating in a Recognised Provident Fund is also
exempt to the extent provident in Rule 8 of Part A of the Fourth Schedule
of the Income Tax Act.
There is no tax deduction if the member has put in five years of
continuous service with the employer (includes period of past
membership with previous employer/s if there is a transfer received).
Otherwise, the member is liable for deduction of tax
25. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 25
AUDIT OF PROVIDENT FUND TRUSTS
Advances / Loans from provident fund corpus:
To buy life insurance policies.
To buy land, or to build or buy a house.
To repay any loans that he has taken to buy or build a house.
To finance the treatment or hospitalisation of self or any
member of the family.
To finance the weddings or college expenses of his children.
In special cases, where the establishment he works for is
temporarily shut down, or if his services have been
terminated and he has challenged that termination in court.
Loans are to be utilized for purpose else provision to add
back to income
26. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 26
AUDIT OF PROVIDENT FUND TRUSTS
Meetings : to be held once in a calendar quarter
Section 17(1A)(d) of EPF&MPAct, 1952
The Board of Trustees constituted shall :
(i) maintain detailed accounts
(ii) submit returns to the RPFC
(iii) invest the provident fund monies
(iv) transfer provident fund account of any employee
(v) perform such other duties as may be specified
27. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 27
AUDIT OF PROVIDENT FUND TRUSTS
Submission of Returns
EPF&MP Act
IT Act
28. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 28
AUDIT OF PROVIDENT FUND TRUSTS
Health of Securities
State wise exposure
12.30
20.51
82.93
0
10
20
30
40
50
60
70
80
90
RupeesinLacs
Rajasthan
Karnataka
Andhra
Pradesh
States
29. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 29
PSU exposure
0
20
40
60
80
100
120
140
160
RupeesinLacs
BM
AB
IF
IC
SS
HD
Public Sector Units
30. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 30
271.50
87.86
61.37
10.25
0
50
100
150
200
250
300
RupeesinLacs
Finance
Pow
er
Irrigation
H
ousing
Rupees in Lacs
Sector
Sector wise exposure
31. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 31
Redemption of Investments at maturity
140.00
20.56
213.41
22.06
81.44
65.40
105.28
45.14
0.87
0
50
100
150
200
250
RupeesinLacs
1YEAR
2YEARS
3YEARS
7YEARS
8YEARS
10YEARS
11YEARS
15YEARS
24YEARS
Period of redemption
33. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 33
Recent Changes …..
and Challenges
Auditors change in two years
Investment Pattern opened up
Rate of Interest
Accounting Standards
Valuation of Investments
FBT – SAF
34. Sushil Jeetpuria & Co Pioneer eServe Pvt Ltd 34
AUDIT OF PROVIDENT FUND TRUSTS
Anamolies :
No authentic data available,
however,
Rs 1,40,000 crore with RPFC
Rs 1,40,000 crore in private trusts