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Saturday, 23 July 2011

EPFO and the Indian Seafarer - a perspective (and opening gambit - service tax)

Some of us may recall the big scandal with the Seaman's Provident Fund, which had vanished as part of the even bigger Home Trade scam, some slight details of which are here:-

This was, in value terms, amongst the top 10 scams - considering that the Bofors scam was about all of about 25-40 crores. Ofcourse, scam levels have gone up now, and just one small builder EPFO scam in Delhi (kashyaps) has a figure of about 170 crores to it.

As far as Indian seafarers working on Indian or foreign flag ships are concerned, the matter is now moving up rapidly, and exemption granted to shipping companies and shipmanagement companies as a special case under the Seaman's Provident Fund Act and Amendment is being looked into. In any case, it is not possible that a "special" act for Indian seafarers should provide lesser provident fund for Indian seafarers!!

More on that later, there are many angles to it, including the definition of the word "employer", but here's an article I wrote on EPFO issues which might be of interest. As Indian seafarers, you may wish to ask your employer, too, about this.

The bigger issue here is this - for many Indian seafarers working on Indian or even foreign flag ships on contractual basis, the issue of service tax to be levied by the contractor (seafarer) on the shipping company / shipmanager, is being looked at. So, in other words, if you are working on "contract" wages, then be aware that you may be liable to charge service tax. Please do check with your tax consultant here, too.

And the question to our friends at DGS, soon in the form of an RTI, will be this:- how is the Seaman's Provident Fund giving lower returns than the Employees Provident Fund Organisation (EPFO)? The whole concept of an "exempted" category under the various Acts and Rules underlines the simple fact that a "special" provident fund will provide better returns than the "normal' EPFO.

Big question, that. If you look at the answer carefully, then Indian seafarers, whether on Indian flag or foreign flag, are served far better by being covered under the EPFO - just like any other "international worker". More on that soon, too . . .

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