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Ministry of Labour & Employment


The Parliament today passed the Employees’ State Insurance (Amendment) Bill, 2009. The Employees’ State Insurance Scheme is a welfare scheme framed for workers covered under the Employees’ State Insurance Act, 1948 providing for medical benefits for the employees and their families and payment of benefits to the employees in cases of sickness, maternity and employment injury. The Scheme is applicable to power-using factories employing 10 or more persons and non-power using factories and certain other establishments employing 20 or more persons.

Keeping in-view the changing economic scenario, the Act needed important amendments. The salient features of the amendments are as follows:—

(i) The age limit of the dependants has been enhanced from 18 to 25 for the purpose of dependants’ benefit. It will benefit large number of workers.

(i) It extended social security benefits to those apprentices who are covered by Standing Orders and also to those trainees whose training is extended to misuse exemption granted to apprentice from provisions of the ESI Act.

(ii) The definition of “Factory” under Section 2(12) has been amended to facilitate coverage of smaller factories and cover all factories which employ 10 or more persons whether these are run by power or without power.

(iii) DG-ESIC is being made Chairman of Medical Benefit Council to improve quality of medical benefits.

(iv) It enabled ESIC to appoint consultants and specialists on contract basis for better delivery of super-speciality services.

(v) The post of Insurance Inspector is re-designated as Social Security Officer to give them the role of facilitator rather than to act as mere inspectors.

(vi) The procedure for determination of contribution has been streamlined to avoid harassment of employers as the Inspectors now no more to inspect the books of accounts of the establishment beyond five years as under present system of unlimited period.

(vii) It has added the benefit for workers for the accidents happening while commuting to the place of work and vice versa;

(viii) State Governments are allowed to set up autonomous organisations to give ESI Scheme benefits.

(ix) It extended medical treatment to those who retire under Voluntary Retirement Scheme or take premature retirement.

(x) It enabled ESIC to enter into agreement with any local autho­rity, private body or individual for commissioning and running ESI hospitals through third party participation wherever the hospitals are not fully utilised on account of closure of factories or Insured Persons not being available.

(xi) It will improve the quality of its service delivery and raise infrastructural facilities by opening medical colleges and training facilities in order to increase its medical and Para- medical staff.

(xii) It provided for grant of exemption by appropriate Government to factories/establishments only if the employees get substantially similar or superior benefits.

(xiii) The exemptions shall be granted only prospectively as the ESIC already has made provision of infrastructure to provide service to the IPs for the past period.

(xiv) A new Chapter V-A has been added to enable provision for extending medical care to non insured persons against payment of user charges to facilitate providing of medical care to the BPL families and other unorganised sector workers covered under the Rashtriya Swasthya Bima Yojana (RSBY).

These amendments will ensure coverage of more workers under the ESI Scheme in the organised sector and will also enable the ESI Corporation to participate in schemes such as RSBY that may be framed for the workers in the unorganised sector. The amendments are also aimed at improving service delivery to the existing members of ESI Scheme as well as bringing the provisions of the Act in tune with the changing circumstances.

AICPI Numbers for Industrial Workers on Base 2001=100 for the month of March, 2010

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All India Consumer Price Index Numbers for Industrial Workers on Base 2001=100 for the month of March, 2010

All India Consumer Price Index Number for Industrial Workers (CPI-IW) on base 2001=100 for the month of March, 2010 remained stationary at 170 (one hundred and seventy).

During March, 2010, the index recorded a decrease of 4 points each in Tiruchirapally, Giridih and Sholapur centres, 3 points each in Coimbatore, Quilon, Madurai, Kodarma and Yamunanagar centres, 2 points in 12 centres and 1 point in 22 centres. The index increased by 4 points in Ludhiana centre, 2 points in Jamshedpur centre and 1 point in 10 centres, while in the remaining 24 centres the index remained stationary.

The maximum decrease of 4 points each in Tiruchirapally, Giridih and Sholapur centres is mainly on account of decrease in the prices of Rice, Arhar Dal, Masur Dal, Onion, Vegetable & Fruit items, Sugar, etc. The decrease of 3 points each in Coimbatore, Quilon, Madurai, Kodarma and Yamunanagar centres is due to decrease in the prices of Rice, Wheat, Arhar Dal, Onion, Vegetable items, Coconut, Sugar, Flower/Flower Garlands, etc. However, the increase of 4 points in Ludhiana centre is mainly due to increase in the prices of Wheat Atta, Vegetable Items, Petrol, etc. The increase of 2 points in Jamshedpur centre is due to increase in the prices of Wheat Atta, Vegetable Items, Petrol, etc.

The indices in respect of the six major centres are as follows :

1. Ahmedabad - 164
2. Delhi - 157
3. Bangalore - 175
4. Kolkata - 166
5. Chennai - 155
6. Mumbai - 166

The point to point rate of inflation for the month of March, 2010 remained constant i.e. 14.86% at the level of February, 2010.

Conduct of typing skill test on Personal Computer (PC) regarding

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RBE No. 69 / 2010


New Delhi, Dated 5-5-2010

The General Manager(P)
All Zonal Railways and PUs.
(As per Mailing lists)

Subject:-      Conduct of typing skill test on Personal Computer (PC) regarding.


As the Railways are aware, in terms of extant procedure, in case of certain Group 'C' posts, a typing skill test is conducted while recruiting candidates from open market. Till now, this skill test was being conducted on manual typewriters. The issue of conduct of typing test on Personal Computer (PC) instead of manual typewriters has been under consideration of this Ministry.

It has now been decided that infrastructure be developed to conduct such typing skill test on Personal Computer only in future, while recruiting staff from open market. Till development of proper infrastructure, typing test be conducted on Personal Computer, or on manual typewriter, as per the choice of the candidate.

Please acknowledge receipt.

(Hindi version will follow)


Please acknowledge receipt.

(This disposes of DMW/Patiala letter No. 220/E/24/DMW dated 4.8.2009)

(Harsha Dass)
Joint Director Estt.(N)II,
Railway Board.

Compassionate ground appointment - extending second chance for Aptitude Test

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RBE No. 74 / 2010
New Delhi, Dated 14-5-2010

The General Manager(P)
All Zonal Railways and PUs.
(As per Mailing lists)

Subject:-     Compassionate ground appointment - extending second chance for Aptitude Test.


Attention is invited to this Ministry's letter of even number dated 4.4.2007 (RBE No.53/2007) on the above subject.

Pursant to a demand raised by the staff side, Ministry of Railways (Railway Board), have reconsdered the matter and have decided to allow additional (second) chance for passing aptitude test to compassionate ground appointees for post of Assistant Station Master and Assistant Loco Pilot, after a gap of three months instead of the present policy of six months, in exceptional cases, based on merits of each case.

Please acknowledge receipt.

(Hindi version will follow)


Please acknowledge receipt.


(Ravi Shekhar)
Dy. Director Estt.(N)II,
Railway Board.

Decoding the direct tax code

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Decoding the direct tax code

The proposed Direct Tax Code is a combination of major tax relief and removal of most tax-exempted benefits. It is expected to usher in a new tax regime of transparency and greater compliance writes Dilip Maitra.

When archaic rules have to be replaced with new ones, the changes must be dramatic and path breaking. This is what Union Finance Minister Pranab Mukherjee conveyed to all taxpayers when he introduced the draft Direct Tax Code (Tax Code) last week. The Tax Code, now open to public debate, will be introduced as a Bill in Parliament’s winter session. If passed, it will become the new Income Tax Act, replacing the existing four decade old IT Act of 1961. The new IT Act will come into force from April 1, 2011.

In the foreward to the Tax Code Mukherjee explains that the aim is to eliminate distortions in the tax structure, introduce moderate levels of taxation, expand the tax base, improve tax compliance, simplify the language and lower tax litigations. Initial analysis shows that most of these objectives are achievable by tweaking of some provisions.

Talking to Deccan Herald, KPMG Executive Director Personal Taxation, IT & ESOP Vikas Vasal said “The new proposals are in the right direction. They will simplify regulations and reduce unnecessary litigations significantly.”

Agreed Bangalore Chamber of Industry & Commerce (BCIC) President K R Girish. “The Code is a completely new law and not an amendment of the existing Income Tax Act. This is a commendable change as one has always experienced tinkering of existing laws, ” observes Girish.

Major gains for individuals

What do the major changes proposed in the Tax Code look like? Personal income tax, almost all salaried persons will agree, in our country is one of the highest in the world. More open and honest an employer is in terms of disclosing remunerations, worse it is for the employees because taxable income goes up. The present system thus rewards dishonesty and non-disclosure of income by way of lower tax. The Tax Code will try to address these issues by significantly lowering income tax and by disallowing all tax-free perks. It proposed exemption of income tax on specified savings up to Rs 3 lakh a year as against the present deduction limit of Rs 1 lakh for all types of savings under 80C of the IT Act. The catch, however, is that a few long term investments like public provident fund, employer’s provident fund, insurance premium in pension (annuity) schemes, Post Office National Savings Scheme etc will be eligible for tax exemption.

But contributions to fixed deposits, interest and principal payment on housing loans, educational expenses of dependents, and a host of other forms of savings will not qualify as eligible for tax savings. The thrust, clearly, is to induce long term savings for future needs.

The Tax Code also raised income tax slabs significantly, lowering the tax burden on individuals. The draft proposed exempting the general tax payer from paying tax for income up to Rs 1.60 lakh a year.

According to the proposal, a tax payer will pay at the rate of 10 per cent for income above Rs 1.60 lakh and up to Rs 10 lakh, at 20 per cent on income between Rs 10 lakh and Rs 25 lakh and at 30 per cent for income beyond Rs 25 lakh.

At present, while the basic exemption limit remains at Rs 1.60 lakh a year, the limit for tax slabs are much lower — one pays 10 per cent tax on income ranging between Rs 1.60 lakh and Rs 3 lakh, 20 per cent between Rs 3 lakh and Rs 5 lakh and 30 per cent beyond Rs 5 lakh.

Thus, for an individual with taxable income of Rs 10 lakh a year tax payment will drop from Rs 1.68 lakh to Rs 51,000, a net annual saving of Rs 1.17 lakh. The exemption limit for women and senior citizens will continue to be Rs 1.90 lakh and Rs 2.40 lakh, respectively.

Not without pains

If the finance minister is for giving major relief to tax payers, he will also make sure that there aren’t many avenues to avoid taxes. So, as a rider, the Tax Code proposes to add all perquisites enjoyed by a tax payer to income for the purpose of tax calculations. In other words, allowances like leave travel, furnishings, entertainment expenses, conveyance, medical etc, will be added to income.

Similarly, the tax treatment for post-retirement benefits may prove to be a major dampener. Money saved in specified instruments like PPF and PF for getting tax exemption will become taxable when they are withdrawn later.

These investments, when accrued, were earlier exempted from tax. The Tax Code says that under the Exempt Exempt Tax (EET) system all withdrawals will attract tax because the amount withdrawn will be treated as part of the income for that year.

But in the Tax Code it is unclear if the employee’s contribution to PF and PPF will be taxed at the time of withdrawal. KPMG’s Vasal says that this is an anomaly that needs to be corrected. He believes that only the employer’s contribution and interest accrued to the account will be taxed.

Though taxing financial gains available after retirement will pinch the retired people, Vasal is of the view that the proposal is equitable as income is liable to be taxed at least once.

However, as a relief to senior citizens, tax exemption limits for them should be raised to Rs 5 lakh per annum instead of Rs 2.40 lakh at present. The Tax Code, however, specified that the tax exempt status currently available to withdrawals would continue to apply to amounts accumulated in post-retirement savings schemes like PPF, EPF, etc, up to March 31, 2011. Money that accrues from April 1, 2011 will be taxed on withdrawal.

Wealth tax benefits

The proposed Tax Code has sought to make major changes in wealth tax calculations and rates.

The threshold limit for wealth tax will be raised to Rs 50 crore from the present Rs 30 lakh and the tax rate was reduced from 1 per cent to 0.25 per cent.

But, in a smart move, to expand the scope of taxation the Tax Code included financial assets like shares, corporate bonds, fixed deposits, etc in wealth tax. The valuation of these assets will be done at cost or at market price, whichever is lower. In case of capital gains tax too, the Tax Code proposed some sweeping changes. It has done away with the present system of short-term and long-term capital gain tax, and replaced it with a uniform structure and gains will be taxed at the marginal tax rate as applicable to the tax payer. The implications of these changes are clear: The period of holding has no bearing on the tax payable and bigger investors will be taxed at higher rates than the smaller ones.

A mixed bag

For the corporate world, the proposed reduction in the tax rate to 25 per cent from the existing 30 per cent is certainly good news and will help lowering the tax burden of India Inc in a big way. But at the same time the Tax Code proposes to do away with many exemptions that help lowering the tax. In a significant policy change, the Tax Code plans to discontinue all profit linked incentives for area-based investments like setting up plants in a backward area or in the north-east with investment-linked incentives in specific sectors like infrastructure, power, exploration and oil production etc.

Moreover, under the new proposal, tax holiday will not be for a specific period, as is the case now, but will be equal to all capital and revenue expenditure barring land, goodwill and debts.

Once a firm recovers the permitted investments and profits will be taxed. This change is aimed at incentivising capital formation in critical areas and remove incentives to shift profits from the taxable unit to the exempted unit.

On the mat

The Tax Code has also proposed changes in the calculation of minimum alternate tax (MAT) payable by corporates. MAT will now be levied at 2 per cent of the value of gross assets of a firm in case of all companies except for banks which will pay tax at 0.25 per cent. This shift in MAT from book profits to gross assets is aimed at encouraging optimal utilisation and increased efficiency of assets.

But Ernst & Young Partner- Tax & Regulatory Services, Sudhir Kapadia feels that this proposal seems to run counter to the objective of encouraging of capital investments for productive growth. Vasal of KPMG also of the view that changes in MAT rule will cause hardship to loss making companies as they will have to pay tax on assets.

Carrot and stick

If the Tax Code is generous in giving relief to tax payers, be sure, it will also make life miserable for those who evade tax through fraudulent means. As the Tax Code prescribes stiff penalties and prosecution for non-compliance with the tax laws, it proposes that every tax offense under the Code will be punishable by both imprisonment and fine.

Apart from defaulters, the Tax Code proposes to punish tax consultants who help in tax evasion. It gives sweeping powers and blanket protection to Income Tax officials for initiating court proceedings on matters relating to tax offences.

Direct Tax code : The Gains and the Pains

Manintains tax exemption at Rs.1.60 lakh income a year
10 per cent tax income Rs.1.6 to 10 lakh
20 per cent tax on income over Rs.10 lakh upto Rs.25 lakh
30 per cent tax on income beyond Rs.25 lakh
All perks and allowances will be added to income for taxation
Savings up to Rs.3 lakh will be exempted from income for taxation
Withdrawals from PF, PPF etc will be taxed
Wealth tax limit raised to Rs.50 Crore from Rs.30 lakh
Financial securities like shares brought under wealth tax.

Source: Deccan Herald

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