All eyes are on Finance Minister Arun Jaitley who is expected to make an important announcement regarding the proposed tax on 60% of Employees Provident Fund withdrawal. Jaitley may announce a relief after Prime Minister Narendra Modi's intervention.
The Finance Minister is expected to speak on EPF tax proposal in the Lok Sabha after 12 noon. Modi had reportedly asked Jaitley to reconsider the budgetary proposal under which a part of the EPF withdrawal will be taxed, according to highly placed sources.
Sources said that an official level meeting was held in PMO on the EPF tax issue on March 3, 2016, adding that the Finance Minister is likely to make an announcement on the exemptions on the floor of House when he replies to budget.
Notably, Jaitley had justified the move to bring in the taxation proposal in the Union Budget 2016-17. While claiming that the proposal would encourage pension savings, Jaitley also said that there was a very large segment of tax defaulters in the country.
The Finance Minister made it clear that the Narendra Modi government's aim is to create an insured India and presumptive taxes will benefit the small and medium taxpayers.
In his post-Budget 2016-17 interaction with industry chambers, the Finance Minister pointed that the revenue department is doing an important job to make sure that people comply.
The government had also come out with a press note that it was considering demands to limit the tax only to interest accrued. Minister of State for Finance Jayant Sinha had said, "The government is looking into the issue."
Opposition and trade unions have taken the Centre to task on the issue after Jaitley in his Budget speech proposed to levy a tax on 60% of EPF withdrawal.
Before Budget 2016, all employees would put 12% of salary every month into their EPF account and the company would put another 12%. The money deposited in the EPF saves tax under Section 80C and is exempt at entry. Interest is also accrued every year on the same but no tac is to be paid on the interest. When the employee turns 58, they get all the money, tax free.
However, as per the new proposal in Budget 2016, exemptions at withdrawal of EPF are coming to an end. At the time of exit, 60% of the money in EPF will be taxed, unless you invest in annuities. An annuity provides a fixed sum of money each year, like a pension.
Comments
0 comment