THIRUVANANTHAPURAM: The retired employees of the universities in the state is now under the demonetisation cosh.
If the curbs on pension withdrawal limit was not enough, the Income Tax Department has asked all the universities to collect Tax Deducted at Source (TDS) from the post-retirement benefits of ex-employees.
This would be applicable from the 2015-16 financial year onwards. The Department said full exemption from taxation was not applicable to university staff. This would impact hundreds of university pensioners who would now have to pay additional tax on their post-retirement benefits.
‘Express’ has in its possession, a letter from the office of the Assistant Commissioner of Income Tax to the Finance Officer of the University of Kerala.
“As per the provisions of the Income Tax Act, the benefit of full exemption from taxation of Death-cum-Retirement Gratuity (DCRG), commutation of pension and leave salary is allowable only for employees of Central Government or State Government and not to the employees of universities,” the letter said.
The case of Prabhakaran S would throw more light into the plight. He retired as section officer (Higher Grade) from the University of Kerala in May 2015.
Currently drawing a monthly pension of `37,000 per month, Prabhakaran received `32 lakh as post retirement benefits. This included `12 lakh under pension commutation, `8 lakh as leave salary and `12 lakh under DCRG.
“With the new directive, I will have to shell out at least `2.2 lakh extra as tax,” Prabhakaran said.
Top officials of at least three universities confirmed to ‘Express’ that they have received the notice from the I-T Department. They admitted that the unprecedented move would put many university pensioners on the back foot.
K N Gopalakrishnan, President of the Kerala University Service Pensioner’s Organisation said the I-T Department’s “sudden realisation” that university staff were not government employees was mysterious.
“Whenever the state government effects pay revision, we are also given the benefits,” he said.
Gopalakrishnan said there should be no discrimination between government employees and university staff in terms of taxation.