FM Arun Jaitley rolls back proposal to tax EPF
Facing a strong backlash from salaried tax payers over its proposal to tax withdrawal from EPF, the government has decided to roll back the budget proposal that sought to create a pensioned society by discouraging full withdrawal.
“In view of the representation received, the government would like to do a comprehensive review of this proposal and therefore I withdraw this proposal,” finance minister Arun Jaitley said in a statement in the Lok Sabha.
The 40% rebate proposed for the NPS will however continue. NPS is at present fully taxed on withdrawal. This is a relief for NPS subscribers.
A day after the budget government had even issued a statement clarifying the intent behind the proposal and its intent and its limited impact, but the criticism continued prompting the government to withdraw the tax. There is at present no tax on withdrawal from employee provident funds and other superannuation funds. In the recent budget, the government has proposed that withdrawal in excess of 40% of the accumulated corpus will be taxed.