From 1st April 2014, certain types of Provident Fund Trusts and its member are going to have huge taxation problems, as listed below, on account of a change in the income tax rule in Part A of Fourth Schedule, brought in the Income Tax Act vide Finance Act 2006:
The only reason that the effect of the amendments to tax rule related to provident fund trust was not felt by employees and employers till now is due to reason that Labour Ministry used to send a request to Finance Ministry ,before every budget , for the extension of the date of application of the change in those amended rules. The last such extension was made up to 31/03/2014.
This post is going to explain to readers following aspect of impending taxation problems of private provident fund trusts.
1. What was the change in tax rule that affected private PF Trusts ?
2. Which types of trusts are going to suffer due to this change?
3. What are the likely taxation effects on employees who are the member of such private trusts?
4. How the tax burden of employer will increase?
5. Can Private trust save them self even if no recognition from income tax or PF authorities is received?