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More reaction to the government's decision to tax EPF withdrawals

India Blooms News Service | | Mar 01, 2016, at 08:40 pm

#Union Budget # Rollback # EPF tax # Budget rollback

New Delhi, Mar 1 (IBNS) Political leaders voiced their opinion over the proposal in the Union Budget 2016 presented on Monday to tax partial withdrawal from the Employee Provident Fund.

Tweeted Delhi chief minister Arvind Kejriwal, "Spoke to many people. They are v angry. EPF/PPF withdrawals by aam admi taxed, loans of rich waived, black money holders get amnesty."

CPI-M Genereal Secretary Sitaram Yechury tweeted, "Taxing EPF is a devious move by Modi government to hurt the honest, salaried taxpayer while amnesty schemes are announced for tax evaders. The attempt to 'clarify' the EPF ruling by MoS Finance and the Secretary show us how clueless this government is on serious matters."

In the Budget, it was proposed that after April 1, employees will have to pay income tax on 60 per cent of the amount withdrawn from the EPF. The remaining 40 per cent will be tax free. As of now, employees were not required to pay any tax.

According to the finance minister, the move would bring about parity among the New Pension Scheme and other retirement schemes.

He had also said that small salaried employees with up to Rs 15,000/month income will be kept out of purview of the proposed EPF taxation.

The finance ministry on Tuesday has issued a clarification saying that contributions to the Public Provident Fund (PPF) will be exempted from tax and there will be no tax on withdrawal. It also clarified that tax will be levied only on accrued interest on 60 percent of EPF contribution, according to media reports.

The tax on EPF withdrawal is expected to affect 6.5 crore salaried people, according to media reports.

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