EPF tax proposal rolled back, Jaitley announces in Parliament

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Presenting the Union Budget for 2016-17, Union Finance Minister Arun Jaitley had proposed to tax withdrawal of 60 per cent of accumulations in the EPF after April 1, 2016. However, Jaitley today said that the government will be reviewing the proposal.

 Arun Jaitley

 The government today rolled back the Budget proposal to tax Employees' Provident Fund orEPF withdrawal after facing intense criticism from all quarters. Speaking in the Lok Sabha, Finance Minister Arun Jaitley said that the government will be reviewing the proposal.

 
"In view of representations received, the government would like to do a comprehensive review of this proposal and therefore I withdraw the proposal," Jaitley said. However, he added that 40 per cent exemption given to National Pension Scheme subscriber at the time of withdrawal remains unchanged.
"Employees should have the choice of where to invest. Theoretically, such freedom is desirable, but it is important the government to achieve policy objective by instrumentality of taxation. In the present form, the policy objective is not to get more revenue but to encourage people to join the pension scheme," Jaitley said while explaining the rationale behind the tax proposal.
Presenting the Union Budget for 2016-17, the finance minister had proposed to tax withdrawal of 60 per cent of accumulations in the EPF after April 1, 2016. The move was hugely criticised by Opposition parties as well as by employee unions.
Taking note of the severe criticism around the unpopular move, Prime Minister Narendra Modi, last week, had reportedly advised Jaitley to review the tax proposal.
My pressure worked: Rahul Gandhi
Congress vice-president Rahul Gandhi claimed that it was his tough stance over the issue which forced the government to announce a roll back of the widely criticised move.
"Finally the government was forced to listen to people and roll back the patently unfair tax on EPF," he tweeted shortly after Jaitley's clarification.
"The attempt to tax the safety net of millions of hard working middle class people was morally wrong and shows this govt's anti-people mindset," Rahul added.

 

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