Re: Wage revision arrears to retirees vis-à-vis IT recovery issues
We have been receiving a lot of complaints from various divisions in the country regarding IT deduction related issues and we urge upon you to issue clear cut instructions to all the offices of LIC of India. We acknowledge your instructions vide circular dtd.1-1-2016 ref EDA/ZDB/998 and those instructions are also not being followed by the offices. Some of the aberrations/grievances are detailed here below.
1) Relief u/s 89 of IT Act- Despite your clear instructions to allow relief u/s 89, some of the offices are interpreting that relief is allowed only to in-service employees and not to retirees. We have to pity their ignorance. Retirees had to fight to get this relief. Your clarification circular in this regard is solicited.
2) Taxing the PF portion- Another great injustice is being perpetrated on the retirees. The difference in PF recovered from wages is shown as taxable income and huge tax is recovered. Retirees do not mind this portion of PF being diverted to Zonal PF Dept and then payment of the same to retirees from PF Dept. Instead of this they have shown this portion as income without allowing deductions from total arrears (as is being done in case of in-service employees) and huge IT is recovered on this non-taxable portion. It is pertinent here to note that many retired persons have not reached Rs.1.50 lac limit u/s 80 ©in each FY of wage revision period. Hence it is requested that this portion of PF recovery should be shown under the same Head and necessary deductions be allowed in IT for respective FYs u/s 89. Whether the retirees claim this PF portion for IT rebate or not but the PF portion does not come under the Head “income” for taxing purpose. Had the wage rise would have been given in time from 1-8-2012; the retirees would not have faced this situation. They are not at fault. This matter needs your immediate attention as it has become a burning issue to retirees who are getting wage arrears.
We implore upon you to immediately issue clear cut instructions in the matter and oblige.
Thanking you anticipating your immediate necessary action in the matter,