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Drawing flak from all directions, Modi tells Jaitley to axe the EPF tax
Prime Minister Narendra Modi is learnt to have sought a review of the Budget proposal to tax withdrawals from the Employees’ Provident Fund (EPF) and has given directions to Union finance minister Arun Jaitley regarding the same, sources privy to the development claimed.
Prime Minister Narendra Modi is learnt to have sought a review of the Budget proposal to tax withdrawals from the Employees’ Provident Fund (EPF) and has given directions to Union finance minister Arun Jaitley regarding the same, sources privy to the development claimed. The government has drawn flak from all directions on the proposal to tax a percentage of EPF withdrawals. Congress vice-president Rahul Gandhi, while addressing a rally in Assam on Saturday, also put pressure on the Government over the issue, saying that he would continue to fight till the government rolls back the proposal to levy tax on EPF withdrawals.
“This Prime Minister allows thieves to turn their black money into white under the recent Budget’s fair and lovely scheme, but taxes the life-long savings of the honest salaried class,” he said.
Meanwhile, the EPFO trustees’ meeting, scheduled for later this month, is likely to be a stormy affair as trade unions will raise their voice against the Budget proposal to tax EPF withdrawals.
Mr Jaitley, while presenting the Union Budget for 2016-17, had proposed that 60 per cent of the withdrawal on contributions to Employees’ Provident Fund made after April 1, 2016 would be subject to tax. This would apply to superannuation funds and recognised provident funds, including EPF.
EPFO has a subscriber base of over five crore and manages a corpus of over Rs 8.5 lakh crore. Its incremental deposits are expected to touch Rs 1.15 lakh crore during the current fiscal.
“We have received the notice for the 212th meeting of the Central Board of Trustees (CBT) on March 17. We will definitely raise the issue of taxing EPF withdrawals as proposed in the Budget by finance minister Arun Jaitley,” All-India Trade Union Congress secretary and EPFO trustee D.L. Sachdev was quoted as saying by agencies.
“All trade unions will condemn and oppose the proposal which will directly affect the workers. The issue is not listed on agenda but we will raise it in the meeting,” he said.
However, the government says the tax is not for all subscribers to such schemes and that there would be exemptions.
Mr Sachdev said the issues listed for discussion include organisational restructuring of the Employees’ Provident Fund Organisation (EPFO).
The trustees will also take stock of the investment in the Exchange Traded Fund (ETF). EPFO started investing in ETF in August last year. The body has planned to invest over Rs 5,000 crore in ETF in the current fiscal.
