Arun Jaitley rolls back proposal to tax EPF withdrawal

New Delhi: Union Finance Minister Arun Jaitley, on Tuesday, announced the rollback of proposed tax on withdrawals from Employees' Provident Fund (EPF).

Jaitley said in a suo motu statement in Lok Sabha that the purpose to tax EPF withdrawals was to encourage a pensioned society. “In view of representations received, the government would like to do a comprehensive review of this proposal and therefore, I withdraw the proposal," Jaitley added.

The Finance Minister said that 40 per cent exemption given to National Pension Scheme (NPS) subscriber at the time of withdrawal would remain.

Jaitley had in his Budget for 2016-17 proposed to tax withdrawal of 60 per cent of accumulations in the EPF after April 1, 2016.This proposal was criticised by the parties and the unions which said it amounted to forcing employees to invest in pension annuity schemes.

Meanwhile, Congress vice-president Rahul Gandhi has welcomed Jaitley's announcement and said that it was because of his pressure that the ruling government provided relief to the salaried class.