The government will notify categories of employees who will be excluded from the controversial tax proposal on provident fund withdrawals, a finance ministry official said on Friday.
The government will notify categories of employees who will be excluded from the controversial tax proposal on provident fund withdrawals, a finance ministry official said on Friday.
The finance minister Arun Jaitley has in his Budget for 2016-17 proposed taxing 60 per cent of withdrawals from the Employee Provident Fund (EPF) on contributions to be made after April 1, unless the sum is reinvested in pension product such as an annuity. “We have put an excluded employees category in the Finance Bill 2016. The government will notify the excluded category of employees to whom this new regime will not apply,” the official said.
The excluded employees would primarily be the ones drawing statutory wages of up to Rs 15,000 per month. Following a backlash from employees union and political parties, Mr Jaitley has already signalled willingness to reconsider the proposal.
“There has been some reaction. When the debate comes up in Parliament, I will give the government’s response as to what decision we finally take,” he said earlier this week. On table is partially waiving the proposed tax by levying it only on the interest accrued and not on the principal. There are also suggestions for complete rollback.
The EPFO has about 3.7 crore members of which about three crore members are those in the earning category of Rs 15,000 and below (statutory wages).
