Union finance minister’s withdrawal of his proposal to tax 60 per cent of the corpus of the Employees’ Provident Fund at the time of withdrawal unless it was invested in annuity schemes is welcome. It was hugely unpopular and drew flak from all sections, including his own party and the trade union affiliated to the RSS. Even Prime Minister Narendra Modi asked Mr Jaitley to rethink the issue. It is obvious that Mr Jaitley was misled by the bureaucrats in his ministry who failed to foresee the uproar that would follow this decision to tax people’s hard-earned savings built up from their income every month.
Mr Jaitley’s intention was to push people towards pension schemes to secure their future after retirement. This is laudable, but people want the option to invest in instruments of their choice. Mr Jaitley’s action reflects the maturity and bonhomie of this government to bow to the will of the people and not stand on prestige. This was reflected earlier in the huge allocation in the Union Budget towards the National Rural Guarantee Scheme which it had condemned earlier; so also the Aadhaar scheme and others like the Land Bill and the Insurance Bill.
Now, the challenge of passing the Goods and Services Tax (GST) is a serious issue for the government and the ball is in Mr Jaitley’s court. The Opposition, primarily the Congress, have given their objections in writing and are waiting for Mr Jaitley’s response in writing. Mr Jaitley, for reasons best known to himself, is not doing this and keeps talking about his response informally. There is a view that the RSS is against this as is its wing, the Bharat Krishak Samaj. This is also probably why the BJP opposed the bill and held up Parliament sessions consistently when it was in Opposition.
However, when the BJP came to power it made efforts to get the bill passed, but the Congress put three conditions for its support. There is a lot of pressure from both domestic and foreign businessmen to get this bill, a major tax reform, passed. If Mr Jaitley is serious about getting the bill passed, he must show the same give-and-take he did on the EPF issue. The one contentious point is the Congress demand for a constitutional cap on the 18 per cent GST. Mr Jaitley has been standing firm against this as it would pre-empt future changes if the situation demands. He has, however, never put this in writing. It remains a mystery as to why and opens the BJP to criticism that it is not serious and does not want the bill passed. Something has to be done to break this impasse. Perhaps Mr Modi should intervene to save the situation.
