Jaitley had in his Budget proposed to tax withdrawal of 60 per cent of accumulations in the employee provident fund after April 1, 2016.
Bowing to all round attack, especially from the salaried middle class, the Finance Minister Arun Jaitley on Tuesday announced the withdrawal of Budget proposal on the controversial Employee Provident Fund (EPF) tax.
Making a suo-motu statement in Lok Sabha, Jaitley said that the Government would like to do a comprehensive review of the proposal in view of the representations received. “Therefore, I withdraw the proposal,” Jaitley said at the lower house.
Jaitley however said that the 40 per cent exemption accorded to National Pension System (NPS) in this year’s Budget at withdrawal stage would remain.
The 2016-17 Budget had proposed to bring 60 per cent of the EPF monies to tax at the withdrawal stage if the subscriber opts not to invest these monies in annuity plan.
This had stirred a controversy with many among the salaried class contending that such a proposal was a harsh one given that EPF monies were currently tax exempt at all three stages of contribution, accumulation and withdrawal.