The government has rolled back its Budget proposal that sought to levy tax on withdrawal of funds from Employees’ Provident Fund (EPF). Making a suo motto statement in the Lok Sabha today, Finance Minister Arun Jaitley said that tax proposal for National Pension Scheme has been retained.
The minister said that main aim is that employees should have choice of where to invest and idea is to encourage more number of private sector employees to go for pension security after retirement instead of withdrawing the entire money from the provident fund account.
Mr Jaitley said government would also like to comprehensively review EPF tax proposal. Mr Jaitley said that 40 per cent exemption given to National Pension Scheme (NPS) subscriber at the time of withdrawal remains. Finance minister, in his Budget speech for 2016-17, had proposed that 60 per cent of the withdrawal on contribution to employee PF made after April 1st this year will be subjected to tax.
Mr Jaitley said the main category of people for whom EPF scheme was created are the members of EPFO who are within the statutory wage limit of 15,000 rupees per month. He said out of around 3.7 crore people contributing members of EPFO as on today, around 3.26 crore subscribers are in this category. Finance minister said for this category of people, there is not going to be any change in the new dispensation.