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Demand for EPF tax rollback goes viral

Over lakh sign-up for petition against tax; Jaitley to reveal Centre's stand during debate.

New Delhi: Amid wide ranging criticism to tax EPF, Union finance minister Arun Jaitley said on Wednesday that he will spell out the final decision on taxation on EPF when he replies to the debate on Budget in Parliament.

An online petition made on ‘change.org’ seeking withdrawal tax on EPF has already been signed by 1.30 lakh people just within 48 hours. The petition was started by a finance professional from Gurgaon, Vaibhav Aggarwal, and it continues to draw thousands of signatures very hour.

During an interaction with industry, Mr 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,” he said.

“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... 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,” he said.

The matter was also raised in the Parliament. “We are seized of the problem. I will address it during the Budget discussion,” Mr Jaitley said in response to Trinamool Congress members raising the issue in Lok Sabha.

There has been all round criticism on the budget proposal to tax 60 per cent of the withdrawal from Employee Provident Fund (EPF) on contributions to be made after April 1.

The finance ministry had said on Tuesday that it was looking into demands that only interest generated on contributions made after April 1, 2016 be taxed and that the principal amount remains tax free.

Mr Jaitley said that the intention to bring EPF under tax 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.

Mr Jaitley said the objective behind the proposal was that no tax is levied on 40 per cent of the withdrawal which can be used for meeting retirement commitments. The balance, he said, can be converted into annuity and the person would get a regular pension and he does not pay tax.

“There is also a change in the law that when inheritance comes in there is no tax payable,” the minister said. “This was intended to incentivise people in the private sector also to use it as a kind of pension fund and to disincentive those who otherwise would indulge in consumtion of that fund this move was made,” the minister said.

( Source : Deccan Chronicle. )
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