Tax on Provident Fund withdrawn

Tax on Provident Fund withdrawn

The Centre has withdrawn its proposal to impose tax on Employee Provident Fund (EPF) withdrawals.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 The opposition parties demanded that the tax on Provident Fund be withdrawn.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 But, it has now announced that the tax has been withdrawn.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Congress Vice President, Rahul Gandhi said that the government has succumbed to the pressure from the people and has withdrawn the taxes on PF savings.