After facing flak for proposing a tax on Employee Provident Fund withdrawals, Finance Minister Arun Jaitley has said that he will clarify his final decision on the matter when he replies to the Budget debate in Parliament.
After Budget 2016-17 proposed taxing 60 per cent of the withdrawal from EPF on contributions to be made after April 1, there has been widespread outrage over the proposal.
“Now there has been some reactions. When the debate comes up in Parliament I will give the government’s response as to what decision we finally take in this matter,” Jaitley said.
At a meeting organised by industry chambers on Budget provisions, Jaitley said the move was aimed at high-salaried class and not the overwhelming section of 3.7 crore EPF members.
“The revenue department had considered various aspects of the National Pension Scheme and Employee Provident Fund Organisation (EPFO). Their intention is not revenue raising, that was not the principal intention,” clarified the Finance Minister.
The intention behind the move was to make India more insured and pensioned society as the Budget provision provides for no tax on EPF withdrawal if it is invested in pension-based annuities, claimed Jaitley.
“The EPFO has about 3.7 crore members of which about 3 crore members are those in the earning category of Rs 15,000 and below (statutory wages). For them there is no change,” he said. “It is only those private sector employees who have just joined that this will impact them.”
The proposal has been attacked by various employees unions including RSS-backed BMS and political parties who termed it as an attack on the working class and a clear case of double taxation.
“There is Employees’ Pension Scheme, 1995 run by EPFO which provides for pension after the age of 58 years to its subscribers. Then where is the need for encouraging pension,” lashed out BN Rai President of RSS-backed Bhartiya Mazdoor Sangh.
All India Trade Union Congress Secretary and an EPFO trustee DL Sachdev also made the same argument as Rai and said, “Seeing widest opposition to taxing the EPF withdrawals, Finance Minister Arun Jaitley is now trying to mince his words. EPFO runs a comprehensive scheme which has all components — provident fund, pension and insurance.”
(With inputs from PTI)