Mumbai: Prime Minister Narendra Modi on Saturday recommended carrying out a thorough review of the controversial Employees’ Provident Fund tax proposal announced in the Union Budget and has suggested Finance Minister Arun Jaitley to suspend tax on EPF withdrawals for now.
According to several media reports, the EPF announcement by Modi, albeit an adjournment, will come as a relief to the salaried class, which comprises a large number of the total Indian population. The proposed bill was earlier scheduled to come into effect from April 1.
In India, EPF is one of the biggest social security schemes for the salaried class; with approximately 60 million workers depending on it post retirement.
During this year’s Budget session, Jaitley had proposed that 60 per cent of the amount deposited in an employer’s EPF would be taxable at the time of withdrawal from April 1, 2016.
(Read: New EPF norm puts pressure on Centre)
The announcement came as a significant setback to the salaried class, as the entire EPF deposit, at the time of withdrawal, was tax free in case of employers who have served a minimum of five consecutive years in a firm.
After Jaitley announced the proposed EPF taxation scheme, it received criticism from numerous affected people, Congress, trade unions, and even RSS-affiliated Bharatiya Mazdoor Sangh (NPS).
(Read: Trade Unions oppose tax on provident fund withdrawals)
However, Modi’s intrusion today will come as a relief to millions of EPF subscribers who earn more than Rs 15,000 a month.
