EPF tax issue to rock trustees' meet

The Employees’ Provident Fund Organisation (EPFO)  trustees’ meet later this month is likely to be a stormy affair, as trade unions will raise their voice against the Budget proposal of taxing EPF withdrawals.

“We have received the notice for the 212th meeting of the Central Board of Trustees (CBT) on March 17. We will definitely raise the issue of taxing EPF withdrawals as proposed in the Budget by Finance Minister Arun Jaitley,” All-India Trade Union Congress Secretary and EPFO trustee D L Sachdev said.

“All trade unions will condemn and oppose the proposal that will directly affect the workers. The issue is not listed on the agenda, but we will raise it in the meeting,” he said.

The government has drawn flak from all corners on the proposal to tax part of EPF withdrawals.

However, the government says it is not for all subscribers of such schemes and there would be exemptions.

Sachdev said the issues listed for discussion also include organisational restructuring of the EPFO.

Besides, the board will vet the proposal for increasing the number of days for borrowing funds from Collateralised Borrowing and Lending Obligation, or CBLO, for participation in primary auctions of government securities and corporate bonds to 30 days from 15.

The trustees will also take stock of the investment in the Exchange Traded Fund (ETF). The EPFO started investing in the ETF in August last year. The body has planned to invest more than Rs 5,000 crore in ETF in the current fiscal.

The CBT will also review CBLO borrowing transactions by the portfolio managers from September 19, 2015, to December 31, 2015.

Finance Minister Arun Jaitley, in his Budget for 2016-17, had proposed that 60 per cent of the withdrawal on the 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.

The EPFO has a subscriber base of more than 50 million and manages a corpus of more than Rs 8.5 lakh crore. Its incremental deposits are expected to touch Rs 1.15 lakh crore during the current fiscal year.