After facing criticism, Finance Minister Arun Jaitley announced in Lok Sabha on Wednesday that the government has decided to withdraw proposal to tax Employees Provident Fund (EPF) withdrawals.
“Main argument is that employees should have choice of where to invest, idea is to make people join pension scheme,” Jaitley said in a statement Lok Sabha.
Here are the 10 Developments:
1. The roll-back in the PF withdrawal tax was announced by Mr Jaitley in a short speech in Lok sabha on Tuesday. He said that a comprehensive review would be conducted in this regard.
2. The Finance Minister made the announcement while clarifying the government’s stand on the PF withdrawal tax amid controversy over the proposal.
3. Meanwhile, the Finance Minister said that tax proposal for NPS scheme has been retained.
4. The Opposition had criticised the PF withdrawal tax that was announced by the government in the Union Budget last week.
5. Prime Minister Narendra Modi has reportedly suggested to defer the EPF tax for now.
6. While announcing the Union Budget, Jaitley had proposed that 60% of the amount deposited in the employees’ EPF account would be taxable on withdrawing, while 40% would be tax free and this had to be applicable after April this year.
7. According to the provision, in case 60% is re-invested by the employee in an annuity or pension fund then it will be tax-free.
8. Protests were held by the government demanding immediate roll-back of the proposal.
9. Jaitley had said earlier that any decision on the roll-back would be taken by the Prime Minister.
10. Jaitley says the idea behind the EPF tax is to create a pensioned society.