Tax on Provident Fund withdrawn
The Centre has withdrawn its proposal to impose tax on Employee Provident Fund (EPF) withdrawals.
From the very beginning, Central Government Employees unions all over
the country have been opposing the government’s decision to impose tax
on the money that they had been saving during their entire careers.
After the Union Budget, the Central Government workers unions vehemently
opposed the plan.
On February 29, Arun Jaitley, the Finance Minister, presented the
Union Budget for 2016-17 in the Parliament. It was announced that tax
will be imposed on 60 percent of the EPF. The decision was met with
stiff opposition all over the country. The opposition parties demanded
that the tax on Provident Fund be withdrawn.
Arun Jaitley informed that decision in this regard will be made
during the debates on the Budget. Accordingly, during the Parliamentary
debate yesterday, Arun Jaitley voluntarily announced the decision to
withdraw the taxes on Provident Fund. He added that tax exemption for
Rs.1.5 lakhs will be given for the contribution made for pension funds.
The decision to exempt 40 percent of the PF funds from taxes stays.
When the government made the announcement to impose taxes, the
opposition parties and trade unions all over the country accused it of
imposing new taxes whenever it faced cash crunch.
The government had clarified that the decision to impose tax on PF
savings was not meant for increasing the revenue of the government, but
to encourage workers to join pension schemes. But, it has now announced
that the tax has been withdrawn.
Members of the Parliament have welcomed the government’s decision to
withdraw the taxes on PF savings. It has to be mentioned here that Arun
Jaitley, in his statement, had said that the taxes will encourage people
to save more.
Congress Vice President, Rahul Gandhi said that the government has
succumbed to the pressure from the people and has withdrawn the taxes on
PF savings.