Govt. will take the final call on taxing EPF savings before Parliament debate on Finance Bill: Jaitley

Tax proposal not aimed at revenue generation, but help everyone get a pension, says the Finance Minister.

March 02, 2016 12:16 pm | Updated December 04, 2021 11:03 pm IST - New Delhi

Finance Minister Arun Jaitley with MoS for Finance Jayant Sinha at a post-Budget interaction with industry associations, in New Delhi on Wednesday. Photo: Ramesh Sharma

Finance Minister Arun Jaitley with MoS for Finance Jayant Sinha at a post-Budget interaction with industry associations, in New Delhi on Wednesday. Photo: Ramesh Sharma

Finance Minister Arun Jaitley on Wednesday said the Government would take a final decision on the Budget proposal to tax 60 per cent of Employees Provident Fund (EPF) savings of those earning over Rs. 15,000 a month, before it responded to the issue during the debate on the Finance Bill in Parliament.

“We will respond in Parliament…,” Mr. Jaitley said at a post-Budget interactive session with representatives of trade and industry associations, including the CII, FICCI and the Assocham.

The Finance Ministry issued a clarification on Tuesday that EPF savings will not be taxed at retirement, if the retiring employee opts to use 60 per cent of his EPF account balance to buy an annuity product that provides them a monthly pension. The Budget announced that 40 per cent of the EPF savings will be tax-free at the time of withdrawal on retirement.

Mr. Jaitley said the tax proposal was not aimed at revenue generation, but help everyone get pension.

“The balance 60 per cent [of EPF savings] if converted to annuity and used for a regular pension will not be taxed. The objective is to incentivise people to get pension and disincentivise consumption of savings,” he said at the meeting.

The proposal would only impact high-income private sector employees, he said, ADDING that nearly 3 crore active EPF members receiving monthly salaries of less than Rs. 15,000 would not be affected by the tax.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.