EPF's tax row: Big announcement expected, Modi likely to defer EPF tax

| Saturday, March 5, 2016 - 22:48
First Published |
Govt EPF's tax justification: We need money

New Delhi: Prime Minister Narendra Modi’s government is likely to defer the Employees Provident Fund (EPF) tax proposed in the General Budget 2016. The big announcement is expected in Lok Sabha on Friday. The Prime Minister has ordered detailed review and has asked the Finance Minister to submit his report as soon as possible so that the fiscal target could be set in immediately. 
Modi has asked Jaitley to do away with tax imposed on EPF withdrawal after a massive row over the proposal. According to sources, Modi requested Jaitley to revisit the proposed tax on 60% of Employees Provident Fund withdrawal. 
(Also read: PM Narendra Modi requests FM Arun Jaitley to restore tax benefits on EPF )
The government is taking several options into consideration to lessen the impact of the proposal on the salaried middle class in view of the protests from within the BJP, Opposition and other quarters. 
For now, the Budget is proposed at 60% of the EPF amount at the time of withdrawal and the deposits made up to March 31, 2016 would be exempted from the proposed levy. On Friday, 12% of the EPF income can be considered as government can only afford limited exemptions, said the sources.
EPF had seen oppositions as well as citizen’s outrage over the last several days. 
The proposal will be deferred till  Modi comes up with some decision on it. 

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EPFO has the composite benefit of 1) Lump sum amount in the form of PF which the employee can use for his immediate needs after retirement 2) Pension till death or widow Children Pension even if employee dies after one months service. Although the pension may be less it ensures r a life with dignity after retirement. The employee is always free to invest in other Pension Plan according to his requirement as a topup. What EPS Pension does is give you a minimum Social Security. 3) Insurance upto Rs 6 Lac. When all these are available with EPFO, the employee should not be forced towards NPS or Annuity Plans. The triple benefit provided by EPFO is not available in NPS. Govt instead of trying to destroy EPF to promote NPS and Annuity Plans should promote Universal pension by strengthening EPF/EPS. All employees irrespective of their salary should contribute by restricting salary to Rs 15000. In other words if employee has a salary of Rs 50,000 he should contribute on Rs 15000. The other should to be left to the wisdom of the employee. It is not the duty of the Govt to monitor what type of Rice an employee eats

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