New Delhi: In what will bring cheers to millions of salaried class individuals in the country, Finance Minister Arun Jaitley on Tuesday rolled back the controversial budget proposal to tax EPF withdrawals.
Taking the first opportunity available, he made a suo motu statement in the Lok Sabha in which he also announced withdrawal of imposing monetary limit for contribution of employers to provident and superannuation fund of Rs 1.5 lakh for taking tax benefit.
He however stated that 40 percent exemption given to National Pension Scheme (NPS) subscriber at the time of withdrawal remains.
“In view of representations received, the government would like to do a comprehensive review of this proposal and therefore I withdraw the proposal,” Jaitley added.
Clarifying government’s stand on EPF in Lok Sabha, Jaitley said, “The main argument is that employees should have choice of where to invest. Our intention was to encourage more and more employees join the national pension scheme”.
Jaitley in his Budget for 2016-17 had proposed that 60 percent of the withdrawal on contribution to employee PF made after April 1 this year will be subject to tax. This would apply to superannuation funds and recognised provident funds including EPF.
This was criticised by all employees unions as well as political parties.
The proposal would not have impacted 3.26 crore EPFO subscribers drawing statutory wage of upto Rs 15,000 per month. Employees Provident Fund Organisation (EPFO) has a total subscriber base of 3.7 crore.
(With Agency Inputs)