New Delhi: Prime Minister Narendra Modi is veering towards the view that the proposal to tax Employees Provident Fund (EPF) withdrawal be deferred for the time being, PMO sources said on Saturday.
It is also learnt that the announcement is likely to be made in the Lok Sabha on Tuesday. Finance Minister Arun Jaitley had announced 60% tax on EPF on withdrawal in the Union Budget. The government has been facing flak on the issue, with the Opposition accusing it of working against the interests of the working class.
Modi has reportedly asked Jaitley to reconsider the budgetary proposal under which a part of the EPF withdrawal will be taxed, according to highly placed sources.
Modi asked Jaitley to do away with tax imposed on EPF withdrawal after a massive row over the proposal. According to sources, Modi asked Jaitley to revisit the proposed tax on 60% of EPF withdrawal.
Sources said that an official level meeting was held in PMO on the EPF tax issue two days back, adding that the Finance Minister is likely to make an announcement the exemptions on the floor of House when he replies to budget.
Reacting to the development, the Congress said that "corrective measure in budget is always a welcome step". Speaking to CNN-IBN, Congress spokesperson Tom Vadakkan termed it as a "victory for the common man". The Bharatiya Janata Party (BJP) lauded the Prime Minister for taking up the issue.
Notably, Jaitley had justified the move to bring in the taxation proposal in the Union Budget 2016-17. While claiming that the proposal would encourage pension savings, Jaitley also said that there was a very large segment of tax defaulters in the country.
The Finance Minister made it clear that the Narendra Modi government's aim is to create an insured India and presumptive taxes will benefit the small and medium taxpayers.
In his post-Budget 2016-17 interaction with industry chambers, the Finance Minister pointed that the revenue department is doing an important job to make sure that people comply.
The government had also come out with a press note that it was considering demands to limit the tax only to interest accrued. Minister of State for Finance Jayant Sinha had said, "The government is looking into the issue."
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