Brand-new DELHI: Finance minister Arun Jaitley on Tuesday announced the rollback of proposed tax on withdrawals from employees’ provident fund.
“The purpose to tax EPF withdrawals was to encourage a pensioned society. However, in view of the representations made to the government versus the proposed tax, I withdraw it” finance minister Arun Jaitley informed the Lok Sabha on Tuesday.
However, the tax proposal for NPS scheme has actually been retained.
Jaitley in his Budget for 2016-17 had proposed that 60 per cent of the withdrawal on contribution to employee PF made after April 1 this year will be subject to tax. This would certainly apply to superannuation funds and recognised provident funds including EPF.
The proposal has actually come under attack from parties, unions and other stakeholders. Stepping up tension on the Centre, Congress vice-president Rahul Gandhi had said he will continue to fight till it rolls back the proposal for levying tax on EPF withdrawals.
Following a backlash from employees union and political parties, Jaitley had already signalled willingness to reconsider the proposal.
“There has actually been some reaction. When the debate comes up in Parliament, I will give the government’s response as to what decision we finally take,” he had said earlier this week.