Government withdraws proposal to tax on EPF withdrawals
The Government has withdrawn its Budget proposal of imposing a tax on EPF (Employee Provident Fund) withdrawals. Finance Minister Mr. Arun Jaitley in his statement has emphasized that in view of the representation received from various sections the Government will do a comprehensive review of the proposal and, therefore, it is rolling back the proposal of taxing 60% of the withdrawal of EPF corpus on contributions made after April 1st, 2016.
According to the budget presented by the finance minister Mr. Arun Jaitley On 29th of February, the government had proposed that during the time of withdrawal, 60% of an individual’s cumulative corpus in EPF (Employee Provident fund) and NPS (National Pension Scheme) would be taxable. The remaining 40% would not be taxed.
The finance minister on Tuesday said that the proposal to keep 40% of withdrawals from the NPS accounts will stay unchanged.
After a day of the budget, the government had hinted that it was open to modifying the rule to tax only the interest earned on 60% of the EPF contributions which were made after 1st of April 2016.
Withdrawal from EPF is now entirely tax-free and the budget proposal had triggered howls of protest from EPF subscribers and labour unions that have termed it as anti-worker.
EPF is India’s biggest social security scheme with 60 million workers depending on it for post-retirement savings.
Related Topics: Financial Budget 2016-17, Interest rate on PF account.
Hi,
Thanks for the update,
it would be great if you brief us some more clarity on tax on EPF withdrawals.
Thanks!
Raju