NEW DELHI: To shield his government from criticism on the proposed tax on Employees’ Provident Fund (EPF), Prime Minister Narendra Modi has suggested that Finance Minister Arun Jaitley defer the proposal for now.
Sources said that in a meeting between officials from the Finance Ministry and the Prime Minister’s Office (PMO), the EPF issue was discussed and it was believed that the PMO asked it to undertake a detailed examination of the proposed tax. After intervention by the Prime Minister, Finance Minister Arun Jaitley is expected to make an announcement soon on the issue in Parliament.
The proposal, which was made during the Budget, drew criticism from many quarters with Congress vice president Rahul Gandhi announcing that he would step up pressure on the government and fight till the government rolls back the proposal for imposing tax on EPF withdrawals.
Jaitley had, in his Budget for 2016-17, proposed that 60 per cent of the withdrawal on contribution to employee PF made after April 1 this year will be subject to tax.
This would apply to superannuation funds and recognised provident funds, including EPF.
The Prime Minister’s intervention will bring relief to nearly 60 lakh EPF subscribers who earn more than `15,000 per month.
EPFO has a subscriber base of over five crore and manages a corpus of over `8.5 lakh crore. Its incremental deposits are expected to touch `1.15 lakh crore during the current fiscal.
Meanwhile, the EPFO trustees’ meet later in March is likely to be a stormy affair as trade unions are set to raise the issue.
“We have received the notice for the 212th meeting of the Central Board of Trustees (CBT) on March 17. We will definitely raise the issue of taxing EPF withdrawals as proposed in the Budget by Finance Minister Arun Jaitley,” said All India Trade Union Congress secretary and EPFO trustee D L Sachdev.
“All trade unions will condemn and oppose the proposal which will directly affect the workers. The issue is not listed on the agenda but we will raise it in the meeting,” he said.