New Delhi: Prime Minister Narendra Modi has asked Union Finance Minister Arun Jaitley to reconsider the budgetary proposal that will allow a part of the Employees Provident Fund withdrawal to be be taxed.
According sources, the proposed tax may be withdrawn and it is likely to announced in Lok Sabha soon.
Prime Minister's reported directive to Jaitley has come after a massive outrage over the proposed 60 per cent tax on EPF withdrawal.
Finance Minister Arun Jaitley has in his Budget for 2016-17 proposed taxing 60 per cent of withdrawals from the Employee Provident Fund (EPF) on contributions to be made after April 1, unless the sum is reinvested in pension product such as an annuity.
However, the government later clarified the popular public provident fund (PPF) scheme will continue to stay out of the tax ambit and that tax will be levied only on accrued interest on 60 percent of employee provident fund (EPF) contribution.
The excluded employees would primarily be the ones drawing statutory wages of up to Rs 15,000 per month. Following a backlash from employees union and political parties, Jaitley has already signalled willingness to reconsider the proposal.