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Pppffft Provident Fund Follies in India – Part 1

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Dealing with the tax authorities, government officials and more can be so painful in India that every time I’m able to take one step forward, I’m absurdly happy.

As in right now – witness me doing a manic happy jig as I managed to calculate my Service Tax charged less Service Tax paid with a gazillion little receipts to determine my Service Tax payable.

Yessir! I’ve paid it, printed my ‘challan‘ (proof of payment) and the online filing is happening as I speak.

I’m a happy camper!!

Except who knows what will go wrong next…

Some folks would know I’ve struggled for years with Tax Rectification Notices – all stemming from six years ago when I properly paid all of my taxes… except the income tax authorities are unable to connect the data validated and confirmed in one place with demands that are being generated from another. Even giving a print screen from their own system confirming taxes were duly paid is not sufficient to fix the issue. And so that battle continues…

Blog purgatory... Help!

However in the meantime, I took on another battle this year. Call me crazy, a glutton for punishment, but I decided to take on the EPFO – Employee Provident Fund Office.

You see… in my quest to shift attention from business outside of India to business in India, patience, perseverance and… let’s face it… money to survive was required.

Galloping to the rescue – I thought – would be my lovely ‘PF’ aka Provident Funds aka supposedly my Indian retirement funds.

Now in most parts of the world, you would think it is a good thing to keep your state retirement savings untouched until you actually retire. Which is generally solid financial planning. Unless you live in India.

Bring me the money honey! (Udaipur Times)

Bring me the money honey! (Udaipur Times)


It doesn’t make money

Let’s see… if you have the state-run PF (default for nearly all companies), the ‘investment’ they make is at such absurdly low rates it doesn’t even come close to keeping up with inflation let alone currency devaluation.

It REALLY doesn’t make money

Now if you are not continuously employed, or you don’t go through the arduous process of moving your PF from your old employer to your new employer (a process that I gave up on after 1.5 years of efforts in one case and didn’t even try in another), it stops earning even that meagre interest after a couple of years. As in – frozen, inactive, sits there and does nothing but get eroded as every year slips by…

Earlier you couldn’t touch it!

Previously, not only was it mandatory for a foreigner to contribute but it was mandatory that it remain there until retirement. And one could only access if had an active domestic Indian bank account at retirement. Imagine being in your 20s and having a rollicking good time working in India for a couple of years. Then leaving, bouncing around the globe working for the next 30 – 40 years. Would you come back to India to open a bank account for the pittance it would have become by then? I think not!

That's only 5 years devaluation.. imagine 40 years! (Oanda)

That’s only 5 years devaluation.. imagine 40 years! (Oanda)

However it really is YOUR money…

Here is the real kicker – it really is your money. Somewhere along the way, saner heads prevailed and it is again possible through a series of reciprocal international arrangements to withdraw ones PF before retirement if not employed for several years.

That would be me! Ms independent. Ms I don’t earn a salary. Ms I really could do with having access to these funds til all the time and effort invested in building a business starts to pay off…

Armed with the new ability to access my PF, I started my homework in January and the application process in February 2015.

So… what happened?

Stay tuned as our intrepid Canadian adventuress takes on the powers that be in a PF power struggle of epic proportions!

Pfft Provident Fund Follies in India – Part 2

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  1. Hope Townsend says:

    Definately with you on this one – the Philippines tax system is also a headache. Try to open a business, headache. Try to close one, headache. Try to run one, and due to having a pathetic payment system, you end up spending all your profits on fines for late filing of forms.
    I have paid lots of fines for mistakes made by tax department staff!
    Grrr getting out if this system and goung back to farming where the taxman can’t bother me!

  2. Desperately waiting for the part 2 of this series.

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