Taxing times for staff at Bihar varsities, colleges as I-T trashes their PF scheme

Several university teachers in Bihar are in a fix after receiving notice from the income tax department regarding identification of “high value information, which does not appear to be in line with their income tax returns filed for assessment year 2020-21 (relating to financial year 2019-20)”

Several university teachers in Bihar are in a fix after receiving notice from the income tax department regarding identification of “high value information, which does not appear to be in line with their income tax returns filed for assessment year 2020-21 (relating to financial year 2019-20)”. The teachers have been asked to revise their ITRs and submit online response on compliance portal.

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The teachers say the “high value information” is their provident fund (PF) deposit, which the universities in Bihar deposit in the savings bank account as an old practice, and not in the general provident fund (GPF) account. So far, they availed tax relief on the basis of the income and deduction certificate issued by the college principals concerned.

However, the I-T department has refused to accept this system and served notices to individual teachers. This could affect all the teachers and employees working in the universities and colleges of the state, as the same practice has been followed everywhere for decades.

Last year also, the I-T department had refused to recognise PF deductions presently being made for teachers and disallowed any claim of relief u/s 80C of the IT Act, 1960. It also disallowed any claim made by the employees u/s 10 of the I-T Act on the interest received from such prevalent PF schemes in the state universities.

As the teachers usually fix their PF amounts with banks to get higher interest, though it is still lower than the GPF interest, the I-T department treats these fixed deposits taxable income. The Universal Account Number (UAN) also eludes the college/university teachers and employees, as they are out of the PF net.

“Any failure on the part of the drawing and disbursing officers to make deductions of income tax at source at the rate applicable on the income chargeable to salary will lead to recovery from the deductor along with monthly interest,” said an earlier letter from assistant commissioner (I-T, Patna circle) TT Bhutia. The I-T department has stuck to its stand again this year.

Former chief commissioner, I-T, Vijay Sharma, who had sought information from the universities under the Right to Information Act, said there seemed to be a nexus involving all the stakeholders behind the practice adopted in state’s universities. “The PF commissioner should also have taken cognizance of it, as the I-T department is correct in not treating general savings account or fixed deposits out of the purview of PF to avail benefits under relief u/s 80C of the IT Act,” he said.

He said the IT department would recognise the deductions for relief only if the amount goes to the GPF, which is regulated by the state government.

Prof Parvez Ahmad of Patliputra University in Patna said the teachers and employees were the ultimate losers. “Instead of minuscule interest on savings account, they could get higher returns in GPF and the government and the universities must act on it,” he said.

KB Sinha , working president of Federation of University Teachers’ Associations of Bihar (FUTAB), said he had written to the assistant commissioner of income tax earlier, saying there was nothing wrong with the PF deductions in colleges and universities, as the accounts were with the nationalized banks as per provisions of university Acts and statutes and were hitherto treated equivalent to government PF accounts.

“All PF accounts, whether in government or private and autonomous institutions, have controlling officers, Similarly in universities and colleges, registrar/principals are the custodians of PF accounts . No deposit or withdrawal can be made without their consent,” wrote FUTAB working president KB Sinha and general secretary Sanjay Kumar, urging the I-T department to withdraw the letter.

However, I-T department has refused to oblige.

The delay in PF deduction of school teachers appointed in the state since 2006 had also landed in the Patna High Court. After the Patna High Court order and letter from the additional central provident fund commissioner (Bihar and Jharkhand) Rajib Bhattacharya to the department of education, the government finally decided to extend EPF coverage to its nearly four lakh teachers last year, though the teachers have still moved the court with a petition seeking that the benefit be extended from their date of joining, not the date when the government brought them under PF coverage.