"The 9th Bipartite was signed on 27th April 2010. There have been a series of meetings and grand gala celebrations all over the country over the success of the bipartite which is one of the major mile stone in our bipartite relations with the Indian Banks association. It is also a historic achievement as far as securing the 2nd Option on Pension. There have been a number of enquiries as to the implementation of the settlement and also expectations from the rank and file across the country that they would be able to draw the revised salary from the next month as such. The process of getting the agreement vetted by the Government for the purpose of amendments to our regulation was a long drawn procedure in the earlier days. However, over a period of time we have been able to reduce the delay and see that the in principle clearance is available for the implementation pending the amendments to the regulation of our service rules.
2. While appreciating the anxiety of the members across the country, we would only like to assure them that the implementation of the 9th bipartite is not going to be delayed at all and it will take place within the next few days. The leadership of the Confederation is in constant touch with the Indian Banks’ association and our information reveal that the officials of IBA are on their job of obtaining necessary instructions from the Government for the implementation of the salary revision and payment of acturial arrears on adhoc basis at the earliest possible.
3. The next task would be to commence the process of implementation of the 2nd Option on Pension. Comprehensive instructions are being issued to all the banks to speed up the process of obtaining the option and giving effect to the scheme without further delay.
4. Comrades, we have covered a long distance and it is now only a matter of few days before the 9th bipartite along with the 2nd Option on Pension in the Banking Industry is implemented. Let us look forward to cherish the historic moment.
GENERAL SECRETARY "
On account of IBA agreeing to extend 2nd Option on Pension to CPF Optees, funding of pension gap by Optees at 2.8 times of revised pay as on 01.11.2007, a question has arisen as regards tax on the amount to be recovered, out of arrears of salary and allowances payable on account of 9th Bipartite settlement. According to Income tax rules, the gross arrears receivable on account of salary revision is taxable. A portion of arrears is invested in Pension fund towards future liability of Banks who have agreed to extend pension to CPF Optees. Therefore, the contribution has to be treated as investment in Superannuation Schemes and the amount to be exempted from payment of tax.
The Indian Banks’ Association,
World Trade Centre,
MUMBAI – 400 020.
2ND OPTION ON PENSION
CONTRIBUTION TOWARDS PENSION FUND BY CPF OPTEES
As per pension settlement, the employees and Officers are eligible to exercise one more option towards the Pension Scheme, in lieu of the Contributory Provident Fund. The agreement also refers to the funding of the Pension Fund gap by way of contribution by the employees and Officers who are in service, out of the arrears payable to them on account of the 9th Bipartite settlement; apart from surrendering of Bank’s Contribution of PF accumulated in their respective accounts.
2. The contributions made by the employees towards the Superannuation Benefits; such as Provident Fund, Pension Fund etc., are eligible for the tax exemption as per the Income Tax rules and treated as investments in the eligible securities for all practical purposes. Thus, the money, so contributed towards pension fund in Bank is liable to be exempted from the payment of Income tax by the Tax authorities. It is in this background, there is a need to issue proper instructions to all the Banks at the time of sending guidelines for the implementation of the 9th Bipartite settlement as well as the payment of arrears to cover inter-alia:
a) The amount contributed from the CPF Optees towards their part of contribution for the Pension Fund in view of the 2nd Option on Pension extended to them should be treated on par with their contributions towards the superannuation benefits and necessary exemption should be extended at the time of deduction of tax at source. Thus, the recovery made out of arrears for the purpose of payment towards Pension Fund to the extent of 2.8 times of the revised Pay for the month of Nov.2007 should be treated as investment towards the superannuation benefits and necessary exemption should be allowed for the purpose of calculation of Income tax. In other words, the payment made towards Pension Fund on account of the 2nd Option on Pension should not be treated as taxable at the hands of the Officers.
b) The Bank Managements, while furnishing Form – 16 as well as the statement of arrears paid to the Officers should make necessary entry to this effect to enable the Officers’ concerned to utilize the same at the time of submission of their returns.
c) In view of the fact that the tax on the income for the year 2007-2008, 2008-2009, 2009-2010 have already been deducted at source, the Officers’ should also become eligible to apportion this amount as investment in the next three years’ income, since the money contributed is very substantial and they may have already exceeded their entitlement for such investments.
3. We therefore, request you to obtain special permission from the CBDT to exempt the entire contribution towards pension fund, from payment of tax. Please therefore look into the matter and take necessary action without further delay.
Source : AIBOC