Kochi: The Union Bank Officers Association, Kerala State, has filed a writ petition in the Hon’ble High Court of Kerala, challenging the imposition of perquisite tax on concessional loan interest rates for bank employees.
The association argues that the tax deduction, implemented through a circular issued by the Union Bank of India on December 13, 2024, is based on an erroneous interpretation of a Supreme Court judgment. They contend that the deduction is excessive and inconsistent with the practices followed by other public sector banks like the Bank of Baroda and Canara Bank.
According to the petition, the bank has adopted a higher benchmark rate for tax calculation, leading to significant financial burdens on employees. The officers claim that the move has adversely impacted their loan repayments and asset quality, as many had availed loans under the assumption that they would not be subject to such taxation.
The petitioners also highlight the retrospective nature of the tax imposition, arguing that loans availed at a time when no such tax was applied should not be affected. Despite multiple representations from employees, the bank allegedly proceeded with salary deductions without addressing their concerns.
The officers are seeking urgent relief from the High Court, urging it to direct the bank to absorb the tax liability, similar to practices followed by other public sector banks. The case is expected to have significant implications for bank employees nationwide.
It was expected that banks would provide interest benefits to their employees as a staff privilege. This is the bank’s own decision, and the government should not intervene. If the government still includes this in taxable perks, then the bank should compensate for it.
Currently, bank employees are being forced to take legal action. What are our unions doing, and isn’t it the responsibility of UFBU to instruct its 9 constituent unions to support the employees? If this continues, the existence of banks will slowly disappear