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The government is not considering any roll back in the EPF taxation: Reports

The government is not considering any roll back in the EPF taxation: Reports

India Blooms News Service | | 01 Mar 2016, 04:32 pm
New Delhi, Mar 1 (IBNS) The finance ministry is not considering any roll back in the proposed taxation of Employee Provident Fund (EPF) withdrawal and there is lot of misinformation about the issue, according to government sources reported a television channel.

The government has clarified that only the interest accrued on contributions to employee provident fund made after April 1 will be taxed while the principal will remain tax exempt.

Ever since the proposal to tax withdrawals from the EPF was mentioned during the Union Budget 2016 on Monday, the salaried employees have been voicing their concern.

On Tuesday, NDTV had reported that the government may consider its decision to tax EPF withdrawal and might even opt for a partial roll back.

It was even expected that Prime Minister Narendra Modi might intervene.

The government put out several clarifications on Tuesday saying that contributions to the Public Provident Fund (PPF) will remain exempted from tax and there will be no tax on withdrawal.

Revenue Secretary Hasmukh Adhia had said on Monday that there will be no tax on 60 per cent of EPF withdrawn if it is invested in annuity (pension) products for earning regular income. The government reiterated this stand on Tuesday.

The tax imposed on the 60 per cent withdrawal from EPF is being introduced to bring parity among the New Pension Scheme and other retirement schemes and to create a pensioned society reported NDTV quoting government sources.

Meanwhile, political leaders spoke out against the proposal in the Union Budget 2016  to tax partial withdrawal from the Employee Provident Fund.

Tweeted Delhi chief minister Arvind Kejriwal, "Spoke to many people. They are v angry. EPF/PPF withdrawals by aam admi taxed, loans of rich waived, black money holders get amnesty."

CPI-M Genereal Secretary Sitaram Yechury tweeted, "Taxing EPF is a devious move by Modi government to hurt the honest, salaried taxpayer while amnesty schemes are announced for tax evaders. The attempt to 'clarify' the EPF ruling by MoS Finance and the Secretary show us how clueless this government is on serious matters."