Direct Tax Code might discourage taking life Insurance Policies and investment in pension funds

 The Direct Tax Code (DTC) is in the offing.  The bill for this new income tax statue  might be introduced in the  parliament this winter.   Once DTC is in place the income tax act and rules will no longer exist.

It is perceived that the proposed new Direct Taxes Code Bill 2010, if implemented in the proposed form, will be detrimental to the interests of individual policy-holders in insurance companies.

Under the proposed DTC Bill 2010, deduction for payment towards a typical life insurance cover is allowed if the premium paid in any of the years during the policy term does not exceed 5 per cent of the capital sum assured under the policy.

This proposed cap of 5 per cent will deny benefits to large number of policyholders. For an individual aged 30, the minimum term will be around 21- 22 years and for 40 years and above, the term will be 28 years or more.

This will lead to inequity, as for the same term and sum assured, the tax exemption would be available to, say, a 30-year-old person, but not to 40-year-ld person because of higher term insurance content.

Thus, a policyholder of higher age will be forced to pay premiums beyond his working age.

To ensure that life insurance products are long term, there is a minimum lock-in period of five years. The IRDA, in its recommendation to the CBDT, has suggested that only those policies should be allowed for deductions which have a minimum maturity period of 10 years.

Hence, it will be prudent to revise the minimum term of policies to 10 years irrespective of the frequency of premium paid during the term.

Shared allocation

In DTC Bill 2010, a separate window of a much lower amount of Rs 50,000 has been prescribed for life insurance premiums, tuition fees and health insurance premiums.

With increasing costs of education and health care services, much of this small limit would be utilised, leaving little space for life insurance premium. Thus, this shared allocation, actually tries to further undermine the importance of life insurance as an asset class and deprive the benefit of social security to the policyholders.

However, the proposed Bill provides a total exemption up to Rs 1 lakh for investments in long-term savings such as Employees’ Provident Fund (EPF), Public Provident Fund (PPF) and New Pension System (NPS) with no prescribed minimum holding period for investment in these instruments.

It will be desirable to provide a limit of Rs 1,00,000 for life insurance premiums/annuities too.

Also, there are now approximately 31 crores of in-force policies and the persons holding these policies would be substantially affected if the proposed Bill is implemented in its current form, since DTC Bill 2010 does not specify grandfathering of existing policies.

Need for parity

Under the current tax regime, Section 80CCC of the Income-Tax Act 1961 provides for deduction in respect of premiums paid under IRDA approved pension fund/annuity plan. This deduction is allowed up to the aggregate limit of Rs 100,000, considering deduction under Section 80C as well.

However, under the proposed tax regime (DTC), only that amount received under NPS, which is used to buy an annuity plan, will not be taxable in the year of such receipt.

Similar provision needs to be inserted for annuity received by the policyholder from a life insurance company so as to bring parity in long term saving products.

One does get a feeling that the thinkers in the tax planning divisions feel that long-term savings through life insurance is less important for the economy than savings through Employee Provident fund, Public Provident fund and the New Pension Scheme, with the latter being  benefited through fiscal incentives.

Source: The Hindu Businessline

Proposed New Health Insurance Scheme for CG Employees discussed in Parliament

Government on Friday said it was contemplating introduction of a health insurance scheme for central government employees and pensioners on a pan India basis.

In reply to a question in Lok Sabha, Health Minister Ghulam Nabi Azad said the scheme would be an alternative to the existing CGHS scheme.

“The proposal is to make this scheme voluntary and contributory for serving employees and pensioners. However, it is proposed to be made compulsory for new entrants in Government service,” Azad said.

source: Zee News

PETITION FILED BY THE AIACEGEO (Superintendents Association) IN THE APEX COURT FOR APPLICATION OF SC ORDER, DT. 3-8-2011 SINCE 1997

IN THE SUPREME COURT OF INDIA
(CIVIL EXTRA ORDINARY JURISDICTION)
WRIT PETITION (CIVIL) NO.385 OF 2010

IN THE MATTER OF:
VIMAL KUMAR & ANR. … PETITIONERS
VERSUS
UNION OF INDIA & ANR. … RESPONDENTS

APPLICATION FOR CLARIFICATION OF THE ORDER DATED 03.08.2011 PASSED BY THIS HON’BLE COURT

To
The Chief Justice of India and
His Lordships Companion Judges of
Supreme Court of India

MOST RESPECTFULLY SHOWETH

1. That the petitioners had filed the writ petition seeking redressal of their grievances regarding the disparity meted out to them in their career advancement. There has been a consistent dispute going on since decades, regarding the impractical ratio of quota being fixed between three feeder classes of Group B officers for promotion to Group A services. The three feeder classes pertains to three groups namely Central Excise, Customs and Appraises. The petitioners are the Central Excise Superintendents. Admittedly, there has been all time high stagnation in this feeder cadre and the disparity is prominently visible amongst the three feeder classes. Officers of 1972-1975 batches (of Inspector grade) from Central Excise group are still awaiting their second promotion in the entire career; whereas officers of 1992 batch (of Inspector grade) from the Appraiser Group have already been promoted twice. Though the entry level recruitment of all the three class is exactly same, rather for inspector Central Excise additional physical fitness test is mandatory in addition to written and viva-voice test.

The aforesaid grievances were highlighted in the writ petition (385/2010) which was heard with a connected appeal being CA No. 1198 of 2005. It is a matter of fact, however that though the Writ Petition was a substantial petition with many more issues; the Central Board of Excise & Customs filed a counter only in 1198/2005 admitting inter-alia the stagnation in the feeder categories and expressed a desire to change the Recruitment Rules. At this point of time, this Hon’ble Court appreciated the desire of the administrative department viz. the Central Board of Excise & Customs as had been solemnly affirmed in the affidavit and directed all the feeder cadres to co-operate with the administrative department in the exercise of formation of new Recruitment Rules. Further without going into the merits of the Writ Petition as well as the Civil Appeal; the Hon’ble Court had been pleased to pass the following order in substance:-

 
1. All the 3 groups of officers in the feeder categories i.e. (i) Superintendents of Central Excise; (ii) Superintendents of customs (Preventive); and (iii) Customs Appraisers, may make representations to the Union of India suggesting the changes which according to them should be made in the Recruitment Rules for their promotion to Group-A post of Assistant Commissioner (Central Excise & Customs).

2. The Union of India shall duly consider all such representations including those made before it in the light of the subsequent development in the cadre strength of the 3 feeder categories of group-B services and amend/revise the Recruitment Rules including altering the existing ratio to secure just and fair representation of all the 3 feeder categories.

3. Union of India shall try to complete the entire process by 31st December, 2011, uninfluenced by the observations made in the previous judgment of this Court in All India Federation of Central Excise vs. Union of India & Ors. [(1997) 1 SSCC 520], in which the existing ratio was approved as also the observations in the impugned judgment dated 19th December, 2003 of the High Court in Writ Petition (Civil) No. 1324 of 2002 with regard to the jurisdiction of the Central Administrative Tribunal.

4. Having perused one of the Office Orders (No. 51/2011 dated 18th March, 2011), whereby some officers were promoted from Group ‘B’ to the grade of Assistant Commissioner of Customs & Central Excise in the Pay Band 3 with Grade Pay of Rs.5400/- on purely ad hoc basis, we direct that all such ad hoc promotions shall abide by the final decision to be taken by the Department in terms of this order.

The civil appeal and the writ petition are disposed of in the above terms. All other applications are disposed of as having been rendered infructuous.

 

 

(D.K. JAIN, J.)
(ASOK KUMAR GANGULY, J.)

Perusal of the above order eminently makes it clear that there are three directions made by this Hon’ble Court:

I. All three feeder categories shall make representations to the Union of India viz. the Central Board of Excise & Customs; and the CBEC shall consider all such representations including all such representations which were made earlier also; 

II. Amend the Recruitment Rules including, the ratio for promotion mentioned at Rule 18(2) of the Indian Customs & Central Excise Group ‘A’ Rules as amended in 1998 in the light of the revision in the Strengths of the three feeder categories. 

III. Regularize all the ad-hoc promotions from 1997 onwards by taking into considerations the new Recruitment Rules 

2 That in pursuance to the direction of this Hon’ble Court, the applicants submitted their detailed representation on 20th/ 23rd August, 2011. Since the contents of the representations are self explanatory the details are not set out in this application, however, the contents of the same are relied upon for the purposes of present application. The copies of the representations submitted by the applicant are enclosed and marked as Annexure A1 (Colly).

3. As per the direction of this Hon’ble Court the respondent conducted a board meeting on 16.09.2011. The minutes of the Board resolution is filed as Annexure A2.

Bare reading of the minutes/resolution would make it apparently clear that the issues raised by the applicants in their representation have been conveniently given a go-by. Hence, the contentious issues, due to which the feeder category of Superintendent Central Excise had been relegated into all this high stagnation was given a go-by. As the things stand, the CBEC should have considered the effect of the implementation of the earlier RR’s, which was that as on date of reporting the first officer to be promoted from the three feeder categories were factually as under:-

Superintendent of Central Excise 1991

Superintendent of Customs (P.O.) 1996

Customs (Appraisers) 2001

The consideration of the effects of the earlier RR’s would have naturally brought the lackadaisical treatment meted out to the three feeder categories and hence, the future action to repair this situation could have been well defined. This was just not done in said board meeting. The conduct of the respondent is not only detrimental to the interest of the applicants but also militates against the intents of the direction of this Hon’ble Court to solve the long drawn problems for all times to come. The applicants are seriously aggrieved by the steps being taken by the respondent in the pretext of compliance of the order of this Hon’ble Court.

1. Just after the Board meeting dated on 16.09.2011, this group of officers immediately submitted a memorandum to the Chairman CBEC briefing the grievances to him and the copies of this memorandum was sent to all the officers who participated in the said meeting of the CBEC on 16.09.2011. Briefly after the copies were received an office bearer of this Association also met almost all the concerned. In the Memorandum it was specifically requested that the CBEC may call for another meeting and repair the logistics formulated on 16.09.2011. But nothing was done.

2. Further to the meeting of the CBEC on 16.09.2011 the draft Recruitment Rules were exhibited on the site of CBEC on or around 9th October 2011. Though the draft Rules were exhibited, there was no mention as regards time for responses from the feeder categories. However, taking reasonable time, our reactions to the draft Recruitment Rules were sent. The reactions are self explanatory and hence the same is placed at Annexure A3.

3. One more aspect of the minutes of the meeting dated 16.09.2011 is that it spells out the intent of the Central Board of Excise & Customs to deviate from the order of this Court. In as much as they have said that they shall not regularise the ad-hoc promotions in the new ratio and new RR’s, as directed by this Hon’ble Court. The board apparently has misconstrued the order of this Hon’ble Court in so far as regularization of the Ad-hoc promotion since 1997 is concern, therefore, the Board has decided to approach this Hon’ble Court for clarification of the order dated 3.8.2011. This decision would be found mentioned in para 2.4 of the resolution dated 16.9.2011 ( Annexure A2)

In this matter it is submitted as follows:-

• Similar circumstances existed when the decision in 306/88 was given on 22.11.1996 by this Hon’ble Court, directing regularizations of all promotions from 1980 to 1996 in a new ratio viz.6:1:2 which was not the ratio in which the actual promotions were carried out since 1980. The CBEC had gladly accepted the decision and also completed the regularisations in July 2000 as issued by office order no.30/2000 on 31.08.2000.

• Most importantly, it is reversal of a policy which then was only beneficial to Appraisers that are 4% of the total Group B cadres; whereas now beneficiaries shall be the other two feeder categories which constitute 96% of the Group B and who are the feeder categories which have suffered worst stagnation for 14 long years since 1997. In this regularization, some of the anomalies created shall stand automatically rectified.

7. In the meantime it is also learnt that the CBEC had failed to report about the ad-hoc promotions in respect of Group B to Group A to the nodal agencies of UPSC and the DoPT for the last 14 years; Being disturbed by the fact that the CBEC had not informed about the ad-hoc promotions for the last 14 years which was illegal in terms of the basic tenets of service jurisprudence; the UPSC in its wisdom had ordered that the CBEC shall not make any ad-hoc or regular promotions until all the earlier promotions given from 1997 were regularized. The applicants obtained this information from the web site namely Taxindia online.com.

On the basis of the above submissions the applicants humbly seek indulgence of this Hon’ble Court for a clarificatory order directing the respondents to regularize all ad-hoc promotions since 1997 on the strength of the revised ratio of 13:2:1.

PRAYER

It is, therefore, most respectfully prayed that this Hon’ble Court may graciously be pleased to 

a) Clarify the order dated 13.08.2011 passed by this Hon’ble Court in WP(C) No. 385 of 2010 and /or

b) direct the respondent to regularize all ad-hoc promotions from 1997 taking into consideration the revised ratio.

c) pass such other and further order(s) as may deem fit and proper in the facts of the present case.

New Delhi

Dated Drawn and filed by

(SIBO SANKAR MISHRA)

Advocate for applicant

 

UPDATE This petition was filed on 28.11.11 but due to some minor technical problem, number was not allotted. today (i.e. on 15.12.2011) number has been allotted after rectification..

Source: Hydexcust

HERE IS A VERY MUCH ENCOURAGING NEWS ON O.R.O.P.


THE NEW INDIAN EXPRESS, MADURAI EDITION

KUDOS TO I.E.S.M
LET US HOPE FOR THE BETTER RESULTS

UPDATE BY SG AICEIA

Secretary General and Vice President (North) persuaded the three following issues in New Delhi:

·  Anomaly of senior drawing less pay than juniors arising out of fixation of pay after revision of grade pay from 4200/- to 4600/-,

·         Progress of Cadre Review,

·         Renewal of recognition.

The first point was discussed with different Board officials, Expenditure Ministry & Dy. Secy. D.O.P&T;  it was understood that the first part in relation to senior drawing less pay than juniors arising out of fixation of pay after revision of grade pay from 4200/- to 4600/- is fixed now and for the manner of fixation part i.e. grant of one additional increment to all those Inspectors who got promotions or recruited before 01.01.2006, Expenditure referred the file to D. O. P. & T.  Board could not issue the order as the two issues are processed through a single note.  It was assured to us that the Board would be issuing the letter immediately after getting the file from D.O.P&T. Hence the confusion regarding fixation of pay at the minimum of 17140/- is cleared and would be effected shortly.

The delegation met Joint Secy. (D.O.P&T) Sh. Rajeev Kapoor & different officials inclusive of Sh. Anant Kumar to get a clear Idea about the proposal and progress. It was understood that the file is with Deputy Secretary (D.O.P&T), they are examining the CR proposal especially for HAG scale; it was further intimated to the delegation that D.O.P&T is not only sympathetic but also trying to find out some solution on the acute stagnation of Inspectors & Superintendents. Till now there was no trace of curtailment of A.C. posts, discussions are on regarding one time relaxation for filling up of the posts arising out of CR through promotions only. It was assured to us that D.O.P&T shall complete its scrutiny within a fortnight from now and shall send it to Cadre Review Group within the DOPT. Once it was accepted by Cadre Review Group the rest is the implementation part.

Except Mumbai we have received DDO certificates from almost all parts of this country, in Mumbai at least more than 1100 members are deducting membership fees from salary for lack of supervision these DDO certificates and the contributions are not reaching to the Association.  Members of Mumbai are requested to deposit the cheque in the Association Bank Account available in this blog. Once again we are able to submit more than 35% DDO certificates to Board for renewal of recognition. All the units are once again requested to submit their All India  contribution forthwith as Association is struggling with lack of fund.

Excise mop-up dips again in November.

New Delhi: For the second time in last three months, central excise collections slipped into negative terrain, raising concerns of the government missing the indirect tax target for the year. During April-November, the collections were estimated at Rs.2.52 lakh crore, which is 63 % of the budget estimates for 2011-12.

Central Board of Excise and Customs (CBEC) chairman S K Goel said that the latest figures have raised concern about meeting the revised target of Rs.4 lakh crore.

He said in November, collection were Rs.11,761 crore, 6.5% lower than the corresponding period last year when it was Rs.12,574 crore.

During April-November collection rose by of 9% to Rs.94,441 crore. However, the drop in November was mainly on account of a reduction in taxes on petroleum products and fewer clearances, Goel said.

The total indirect tax collections rose 16.8% during the first eight months of the current fiscal to Rs.2,52,544 crore. "There has been a fall in central excise, which is a matter of concern. I have called a meeting of senior officials to discuss why central excise is showing negative growth," the CBEC chairman told reporters.


Source: Times Of India - 10-12-2011

CBEC Cadre Restructure Proposal furnished to DOPT

In the Cadre Restructure Proposal furnished to DOPT, the Central Board of Excise and Customs (CBEC) has sought for 25,000 more employees, equivalent to 40% of its current staffing level, to meet the growing workload.

CBEC is the backbone of Finance Ministry. It administrate the indirect tax policy and collects more than Rs 3.50 lakh crore in a financial year. This revenue is generated on the levy and collection of customs duties, central excise duties and service tax. Apart from the duty to curb goods smuggled to evade payment of customs duties the officers of Customs and Central Excise are also entrusted with the work of prevention of Drug Trafficking.

It is suggested by CBEC that it requires more staff strength to cater to increasing imports, exports, number of passengers in and out of the country. As far as Central Excise and Service Taxes are concerned the growing indutrial production and inclusion of more services in the tax net are main reasons for this proposal for cadre restructure.

The existing strength of 67,000 in CBEC has been proposed to increased 92,000. As per reliable reports, the finance ministry has already allowed it to increase junior staff, but the approval of the department of personnel and training (DoPT) is required to increase the number of officers at senior level.

It is told, CBEC has requested for a 170% increase in our group A level officers (Assistant commissioners and above) and around a 45% increase in group B level executive cadre officers (Inspectors and Superintendents).

Last CBEC cadre restructure was implemented in the year 2002, while this exercise is due after every fiver years.

CBEC has around 2,400 group A level officers and 34,000 group B level officers. In its proposal, it has asked DoPT to create 4,250 additional posts in Group ‘A’ level.

Live Mint reports on Cadre Structure in CBEC as follows

“We do not want to disturb the equilibrium in group A, where more than 50% officers come as direct recruits through UPSC (Union Public Service Commission) and the rest are promoted from group B,” the second official said. “If we give such large (number of) posts, chances are that more group B employees will get promotion and their numbers would be higher than direct recruits. So we are struggling to find the right balance”

UPSC conducts examinations to recruit bureaucrats.

The finance ministry official said the proposed increase in group A level officers will improve their ratio with group B level officers. “Group B officers are stagnating. They are not getting promotions as compared with peers,” he said.

CBEC also plans to improve training methods for lower-level staff and increase ministry-level staff to around 15,000 from 12,000, Sepoy and hawaldars (constables) to 16,400 from 12,600 and stenographers to around 4,500 from 1,600.

Source: Live Mint &  gconnect