Facing heat over its decision to tax 60 per cent of Employees’ Provident Fund on withdrawal, the government on Tuesday announced a rollback on its new proposal which was first announced by Finance Minister Arun Jaitley in the Union Budget last month.
The government’s decision to exempt only 40 per cent of the corpus from tax has angered the salaried class and was slammed by Opposition party leaders. Few days after its announcement, strong reactions from public have prompted the government to issue a clarification over its decision to change the existing structure.
“The purpose of this reform of making the change in tax regime 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,” said Jaitley.
The government in its press note said that they want private sector employees to opt for pension security after retirement instead of withdrawing the entire amount from their EPF account. The government hoped that pensioners would invest the 60 per cent in annuity schemes run by insurance companies, which provide low returns. Trade Unions were also among the most vocal protesters against taxing EPF withdrawals.
Here are the reactions
After EPF was withdrawn
Finally the Govt was forced to listen to people and roll back the patently unfair tax on EPF (1/2)
— Office of RG (@OfficeOfRG) March 8, 2016
EPF tax rolled back: guess govts do respond to what trends on Twitter sometimes!!😄
— Rajdeep Sardesai (@sardesairajdeep) March 8, 2016
Good EPF tax rolled back. But 1 big budget announcement, 4 different clarifications. Maximum government, Minimum governance! #ModiSarkar
— Sitaram Yechury (@SitaramYechury) March 8, 2016
EPF levy is to be withdrawn on the insistence of Namo. But watch Buddhu–he will claim credit.
— Subramanian Swamy (@Swamy39) March 8, 2016
Before EPF was withdrawn
1/ We have noted concerns about changes in tax treatment for EPF/PPF/NPS. Full clarification with FAQs will be issued shortly. @adhia03
Purpose of EPF with incentives is to make the retiree self-reliant when he retires.Hence disincentives to withdraw.. https://t.co/OdSS3j6RJk
— Kiran Bedi (@thekiranbedi) March 1, 2016
Proposed EPF tax is anti-worker and pro-finance. Why workers be forced to put earnings into non-Govt funds with no guarantee of returns?
— Ashok Khemka, IAS (@AshokKhemka_IAS) March 1, 2016
Taxing EPF is a devious move by Modi government to hurt the honest, salaried taxpayer while amnesty schemes are announced for tax evaders
— Sitaram Yechury (@SitaramYechury) March 1, 2016
Spoke to many people. They are v angry. EPF/PPF withdrawals by aam admi taxed, loans of rich waived, black money holders get amnesty.
People work all their lives, EPF is a safety net for them.To destroy this safety net is patently unfair https://t.co/5Ii4f8J8qG
— Office of RG (@OfficeOfRG) March 3, 2016