Finance Minister said that budget proposals on withdrawals on NPS( National pension Scheme) will continue. He also clarified government’s stand on Employees Provident Fund (EPF) in the House.
The Minister said main argument is that employees should have choice of where to invest, idea is to make people join pension scheme. He said government would also like to comprehensively review EPF tax.
There are around 6 crore subscribers of EPFO and the proposed taxation would have impacted 3.7 crore of them. Now there will be no tax on money withdrawing from EPFO.
Govt had proposed in the Budget that after April 1 this year, 60 per cent of the amount deposited in the EPF account of the employee would be taxable at the time of withdrawal, and 40 per cent would be tax free.
However, 40 per cent exemption given to National Pension Scheme (NPS) subscriber at the time of withdrawal will still be there.
Union budget 2016 had proposed that 40 per cent of the EPF withdrawals would be tax exempt and the remaining 60 per cent would also get the same treatment provided the amount is invested in pension annuity schemes.
The proposal would not have impacted 3.26 crore EPFO subscribers drawing statutory wage of upto Rs 15,000 per month.