India Withdraws Proposed Employer Social Tax Changes

By Jared Mondschein

March 14—The government's proposal to increase the tax free threshold for employer contributions to a recognized provident fund has been withdrawn, Indian Finance Minister Arun Jaitley said in India's parliament March 14.

The proposed 2016-17 budget would have increased the tax-free threshold to 150,000 rupees ($2,235) from 100,000 rupees ($1,490), effective April 1, 2017.

Current law, which stipulates that any employer contributions to a provident fund up to and including 12 percent of an employee salary is income tax free up to 100,000 rupees, remains unchanged.

To contact the reporter on this story: Jared Mondschein at jmondschein@bna.com

To contact the editor responsible for this story: Michael Baer at mbaer@bna.com

For More Information

A government announcement on Finance Minister Arum Jaitley's statement is available at http://pibmumbai.gov.in/scripts/detail.asp?releaseId=E2016PR391.

More information on payroll issues in India can be found in the India country primer and in the International Payroll Decision Support Network News.