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Jaitley drops EPF tax proposal
The Union government on Tuesday rolled back a controversial budget proposal to tax employees’ provident fund (EPF) withdrawals, caving in to mounting opposition by labour unions, the salaried class and rival political parties. “In view of the representations received, the government would like to do a comprehensive review of this proposal and therefore I withdraw the proposals,”
New Delhi: The Union government on Tuesday rolled back a controversial budget proposal to tax employees’ provident fund (EPF) withdrawals, caving in to mounting opposition by labour unions, the salaried class and rival political parties. “In view of the representations received, the government would like to do a comprehensive review of this proposal and therefore I withdraw the proposals,”
Finance Minister Arun Jaitley said in a suo motu statement in the Lok Sabha. In fact, Prime Minister Narendra Modi intervened on behalf of the employees and directed the Finance Ministry to drop the proposal and hence the decision in its favour.
In the budget presented by Jaitley on February 29, the government announced 40% of an individual’s accumulated corpus in EPF and National Pension System (NPS) schemes would not be taxed at the time of withdrawal. This was taken to mean that the remaining 60% of the EPF corpus was taxable. The budget also proposed a monetary ceiling of Rs 1.5 lakh on employers’ contribution to PF accounts. This has also been withdrawn.
Jaitley, however, said the proposal to keep 40% of withdrawals from the NPS accounts tax-free stayed unchanged. Withdrawal from the EPF was entirely tax-free and the budget proposal had triggered howls of protest from subscribers and labour unions that termed it anti-worker.
The EPF is biggest social security scheme with 60 million workers depending on it for post-retirement savings. Meanwhile, Minister of State for Labour and Employment Bandaru Dattatreya said the Centre is mulling widening the ambit of EPF by including all those drawing Rs 10,000 per month and an amendment would be brought in to this effect soon.
Speaking to the media, he said the Centre was pro-employees and pro-workers and would go to any extent to mitigate their hardships. The minister said the decision to go back on the announcement of imposing a tax on EPF savings was taken with due respect to the people's sentiment.
(With inputs from Agencies)
