AIBOC CIRCULAR NO. 34 DATED 29.03.2011

AIBOC issued its circular No. 34 dated 29th March 2011 on recovery of tax on 2.8 times of Basic Pay contribution to the Pension Fund. We are reproducing the same here for our readers.

CIRCULAR NO: 34                                                         29th March, 2011

TO ALL AFFILIATES/MEMBERS:

RECOVERY OF TAX ON 2.8 TIMES BASIC PAY - CONTRIBUTION TO THE PENSION FUND

Our Affiliate at Corporation Bank, Bank of India and Indian Overseas  Bank have been successful in securing injunction in Kerala High Court and Madras High Court, Chennai, respectively on deduction of  income tax on 2.8 times of revised basic pay as on 1.11.2007 contributed to Pension Fund as per the conditions of the 2nd  Option of Pension. As per the Court orders, the income tax recovered on the said 2.8 times of revised basic pay  should not be remitted to the Government of India, until the Courts take a final decision in the matter.

We have today addressed a communication to the Chairman, IBA, citing the above said Court orders, and requested them to advise  the member Banks  not to recover Income Tax on the said 2.8 times of revised basic pay as  at 01.11.2007 and if already recovered, not to remit the same to the Income Tax Department,  Government of India. Text of the communication is appended.

We will keep you posted of the developments in the matter.

With greetings

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

No./1452/178/11                                           28.03.2011

To,

The Chairman,

The Indian Banks’ Association,

World Trade Centre Complex,

Centre 1, 6th Floor, Cuffe Parade,

MUMBAI – 400 005.

Dear Sir,

RECOVERY OF TAX ON 2.8 TIMES - CONTRIBUTION TO THE PENSION FUND

We invite your attention to our letter No.1452/120/11 dated 17.02.2011.

You may be aware that, our affiliates in Corporation Bank and Bank of India, have obtained an injunction orders from the Hon’ble High Court of Kerala against the deduction of Tax out of 2.8 times of revised Basic Pay as on 01.11.2007, from the CPF Optees, towards 2nd Option cost on Pension. The said tax, if it is already deducted, should not be remitted to the Government of India, until the Court takes final decision. They have made, IBA as one of the respondents.

Similarly, our another affiliate in Indian Overseas Bank is also successful in getting the injunction order to-day against the deduction of Tax at 2.8 times contribution from the judicature of Madras High Court, Chennai.

We, therefore, urge upon you to issue necessary instructions to all Member Banks not to deduct the tax, from the 2.8 times contribution to the Pension Fund, if, deducted already, not to remit the same to the Government, until final verdicts pronounced by the respectful Hon’ble High Courts.

Kindly treat the matter as most urgent.

With greetings,

Yours sincerely,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY