New EPF norm puts pressure on Centre
Finance Ministry clarified that the Public Provident Fund (PPF) will continue to remain tax-exempt.
New Delhi: Facing all-round criticism, the government on Tuesday promised to consider demands for a partial rollback of the proposal to tax 60 per cent of withdrawals from provident fund accounts and a ceiling on employers’ contributions.
Read: 40 per cent provident fund withdrawal exempted
It also clarified that the Public Provident Fund (PPF) will continue to remain tax-exempt. The finance ministry said it was looking into demands that only the interest generated on contributions made after April 1, 2016 should be taxed and that the principal amount remain tax-free.
The finance ministry also tried to create the impression that only “highly-paid employees of private sector companies” will be impacted by the move to levy a tax on EPF.
Confusion prevailed on the issue of taxation on EPF all through Tuesday.
Earlier, revenue secretary Hashmukh Adhia was quoted as saying only 60 per cent of interest on contributions made after April 1, 2016 would be taxed and that the principal amount of contribution will remain untouched at the time of withdrawal.
Read: Sangh parivar aide Bharatiya Mazdoor Sangh plan anti-EPF tax stir
However, in the evening a press release issued by the finance ministry said that suggestions from various quarters to tax only the interest and not the principal was under consideration.