Breaking from the long-held practice of exemption at all stages, the Budget for 2016-17 sought to impose a retirement tax at the time of final withdrawal on 60 per cent of contributions made after April 1, 2016, to EPF and other schemes.
Seeking to dispel fears, the government on Tuesday said PPF will not be taxed on withdrawal and only the interest that accrues on contributions to employee provident fund made after April 1 will be taxed while principal will continue to be tax exempt.
PPF contributions will continue to be tax exempt; no tax on withdrawal: Revenue Secretary Hasmukh Adhia.— Press Trust of India (@PTI_News) March 1, 2016
Small salaried employees with up to Rs 15,000/month income will be kept out of purview of proposed taxation of EPF: Adhia.— Press Trust of India (@PTI_News) March 1, 2016
Only interest accrued on 60 per cent contribution to EPF after April 1, 2016 will be taxed; principal amount to remain tax exempt: Adhia.— Press Trust of India (@PTI_News) March 1, 2016
In spite of this clarification, the twitteratti weren't convinced as most of them lambasted Jaitley for 'stabbing them in the back'.
Now I understand why Afridi keeps coming out of retirement. Pakistan must be having a similar EPF rule.— Ramesh Srivats (@rameshsrivats) March 1, 2016
First we pay tax on salary than by means of VAT/Service tax on every purchase and now whatever savings we do is also taxable. #RollBackEPF— Surbhi Sondhi (@RisingSurbhi) March 1, 2016
40:60 rule on EPF must go. Govt can't force me to invest in annuities. That's a ruse to collect Service Tax. Tell whole story. #RollBackEPF— কাঞ্চন গুপ্ত (@KanchanGupta) March 1, 2016
Amazing how "middle class" can organise so self-righteously to defend its own subsidies, such as on PF, but hates NREGA etc #rollbackepf— Mihir Sharma (@mihirssharma) March 1, 2016
People are demanding #RollBackEPF because it is impossible for an Indian to imagine that the Govt can spend money efficiently— IndiaSpeaks (@IndiaSpeaksPR) March 1, 2016
Modi govt is showing middle finger to the middle class. #RollBackEPF— Tarandeep Singh (@Taran4) March 1, 2016
Reward for black money holder, penalty for hardworking salaried people. Modi back stabbed middle class #RollBackEPF tax and locking period— Ravi (@RR4900) March 1, 2016
Retirement savings are now a target,there were not meant for foreign tours but for the medical expenses & decent retired life #RollBackEPF— Haseeb Shah (@haseebshah08) March 1, 2016
In a country with no or least social security at all post retirement, how can govt get away by taxing EPFO? #RollbackEPF— Vishal Joshi (@Vishj05) March 1, 2016
All my life I have seen Middle & Lower Income families coping personal emergencies by digging in #EPF savings. Want a list of such tasks ??— Yashwant Deshmukh (@YRDeshmukh) March 1, 2016
(With Inputs From PTI)
(Feature Image Source: AFP)