Nitish Kumar slams NDA over EPF tax, says it will harm youths

Now Para 138: " In case of superannuation funds and recognised provident funds, including EPF, the same norm of 40 per cent of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016".

The announcement is likely to be made by Finance Minister Arun Jaitley on the floor of the House when Parliament convenes next week.

Ever since the proposal to tax withdrawals from the EPF was mentioned during the Union Budget 2016 on Monday, the salaried employees have been voicing their concern while rival politicians demanded its rollback.

Besides, with the election dates announced for five states, the BJP has also conveyed to Jaitley that it did not want the issue to come in the way of the party's campaign efforts.

Following criticism over the proposal, both from people affected and political parties, the Finance Minister had said at a meeting of NDA lawmakers last Tuesday that any decision on a reversal would be taken by the Prime Minister.

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Sources in the ministry said the government may also withdraw a new provision added by Jaitley to put a ceiling of Rs 1.5 lakh on the employer " s contribution and continue with the existing provision of the employer contributing not more than 12% of the salary.

The excluded employees would primarily be the ones drawing statutory wages of up to Rs 15,000 per month.

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.

"This Prime Minister allows thieves to turn their black money into white under the recent Budget's fair and lovely scheme, but taxes the life-long savings of the honest salaried class", he said. By referring to the representations and talking of levying the proposed tax on returns, it is trying to mollify the critics.

The Labour Ministry has told the PMO that EPF members already get a pension under the employees' pension scheme, so instead of forcing them to buy another pension plan through an annuity product with 60 per cent of their EPF account balance at retirement, it would be better to revamp the existing scheme.