PF Rules Canceled: Karnataka High Court has given an important decision on Provident Fund. The court has canceled the amendment made in the PF law 15 years ago, calling it unconstitutional. Thousands of workers are expected to be affected by this decision of the court.
PF Rules Canceled: Karnataka High Court has said that giving benefits of Employees Provident Fund (PF) and Pension Scheme to foreign workers is unconstitutional. The court’s decision has come 15 years after the amendment in the law. The High Court has canceled the provisions made by amending the law to provide benefits of PF and Pension Scheme to international workers, terming them unconstitutional and arbitrary. It is believed that the government and Employees Provident Fund Organization (EPFO) may challenge this decision of the High Court. This decision will affect thousands of foreign workers who have contributed to the social security scheme or are currently part of it. Some people had filed a petition in this regard. These included people from sectors like education, logistics, real estate and technology. He argued that these provisions are a violation of Article 14 of the Constitution which gives the right to equality before law. EY said in a note that their complaint was that it discriminated between Indian and foreign workers. Irrespective of the salary of foreign workers, they are covered under the PF scheme whereas domestic workers earning salary more than Rs 15,000 are outside it. His argument was that foreign workers work in India for a limited period and paying contribution on their entire global salary would cause irreparable harm. This decision of the High Court has created many challenges for foreign workers and the government.
What is the problem
Kuldeep Kumar, partner at Mainstay Tax Advisors, said, “This decision will have wide-ranging implications as these provisions were introduced 16 years ago. Such as whether international employees should stop contributing or those who had contributed earlier and have now left the country can still claim a refund before attaining the age of 58 years? Then, what will happen to the income tax paid on such contributions and interest. For the last few years, contributions of more than Rs 7.5 lakh to employer’s PF and contributions of more than Rs 2.5 lakh to employee’s PF are taxable.
In the April 25 order, Justice KS Hemalekha said that the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 was created to ensure that low-paid employees get retirement benefits and higher-paid employees do not get the benefit of this law. must be given. It said that paragraph 83 of the EPF (dealing with international workers) is in the nature of subordinate legislation and cannot go beyond the scope of the law. The judgment said that allowing an Indian employee working abroad to continue to contribute Rs 15,000 to the PF while asking a foreign employee to contribute the entire salary is discriminatory and a violation of Article 14.
Central government’s argument
The High Court rejected as temporary the central government’s argument that contributions were made mandatory as a measure of reciprocity to honor social security agreements. Due to these agreements, foreign employees are either exempted from becoming members or are allowed to withdraw the corpus on leaving India instead of waiting till the age of 58 years.
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