PF body says it’s exempted from service tax since April 2016

The Goods and Services Tax (GST) Intelligence unit has slapped a notice on the Employees’ Provident Fund Organisation (EPFO) for defaulting on payment of service tax and has sought to examine the PF department’s records till 2016-17.

The EPFO, however, told Revenue authorities that the PF office was exempted from paying service tax from April 2016 and hence, its services were exempt from any levy under the new indirect tax system. On July 25, the Directorate General of GST Intelligence wrote to the EPFO headquarters informing about a probe into non-payment of service tax between July 2012 and March 2016.

It had sought for overall records of all its regional and zonal offices and issued separate notices to EPFO’s different offices. “EPFO has been granted exemption from the levy of service tax…with effect from 1 April 2016. Therefore, requisition of records up to 31 March 2017 may not be justified,” the EPFO wrote in a missive to the GST Intelligence unit on September 14.

Negative list

“Similarly, the exemption has continued under GST Act, by placing EPFO in the negative list,” it added.

In its letter, it further challenged the demand for levy of service tax on statutory administration charges and interest charged by EPFO. The EPFO cited an order dated April 13 from the Customs, Excise and Service Tax Appellate Tribunal which said that it was not liable to pay service tax on the statutory activities performed under the Employees’ Provident Fund and Miscellaneous Provisions Act 1952.

EPFO and ESIC [Employees’ State Insurance Corporation] are two important organs of the State providing social security to the working class of the country under the Ministry of Labour and Employment.

As the service tax exemption came into effect from April 2016, the Labour and Employment Ministry, which has administrative charge of the EPFO, earlier this year asked the Finance Ministry to extend the relaxation retrospectively. The ministry had argued that the EPF was a social security scheme and did not come in the category of ‘banking and financial services.’

“ESIC has been granted exemption for the past period by granting exemption from retrospective effect. EPFO has also taken up the matter with Ministry of Finance on the similar lines through Ministry of Labour and Employment, which is under consideration,” the EPFO stated.