The government rolled back the proposal to tax Employees’ Provident Fund (EPF) withdrawals, as it realised that concerns raised by people are very legitimate, Minister of State for Finance Jayant Sinha said on Tuesday. Sinha said that the objective of the proposal was to provide “further benefits to salaried class as far as pension was concerned”.
In the face of all round attack, Finance Minister Arun Jaitley completely rolled back the controversial proposal to tax EPF at the time of withdrawal on Tuesday.
Read more from our special coverage on "EPF"
In the Budget for 2016-17, Finance Minister Arun Jaitley had proposed to tax 60 per cent of the corpus of the EPF contributions created after April 1, 2016 at the time of withdrawal. He proposed to exempt these from income tax if the amount was invested in pension annuity scheme.
The Minister further said that government wants to work for the people who are saving for their retirement.
“I want to assure, every one who is saving for retirement that government is on your side, government wants to work with you, and it wants to provide you incentives and the opportunities... that’s why we have modified EPF now.” The minister said the objective of proposal to tax EPF at time of withdrawal was to strengthen the pension system in this country and bring EPF and NPS on par so that our salaried class that were saving for retirement would be able to make a choice between two schemes independent of their tax structure.
“The objective of the proposal to tax the employees’ provident fund (EPF) at the time of withdrawals was never ever to raise tax revenues,” he said.
