Taking note over the rising concerns from different sectors in India, Prime Minister Narendra Modi has asked Finance Minister Arun Jaitley to review his proposal of imposing tax over withdrawal of Employee’s Provident Fund (EPF).
During budget announcement, FM had proposed that after April 1, 2016, 60 per cent of the total amount in the EPF account of employee will be taxable at the time of withdrawl, rest 40 per cent will remain tax free.
Earlier, full amount used to be tax free if the employee is withdrawing his/her money after five years of service.
Following strong reactions from both leaders in opposition and also people getting affected from it, Arun Jaitley met NDA lawmakers to decide upon the future of the proposal. He also mentioned that final call over the changes will be made by Prime Minister Narendra Modi only.
According to several news reports, government is now considering the decision of rollback. Official confirmation to the news is yet to be made. While taxing the interest on the withdrawal would need only a clarification of intent in Parliament, a rollback may need an amendment which may be moved when the Budget comes for discussion in the Lok Sabha.
The EPF is a retirement benefit scheme for salaried employees. Any company with over 20 employees is required by law to register with the Employees' Provident Fund Organisation (EPFO).