In the middle of rising opposition from salaried class and labour unions, government on Tuesday withdrew much criticised budget proposal to tax provident fund withdrawals.
Finance Minister Arun Jaitley informed the Lok Sabha that proposal to tax withdrawals from employees’ provident fund (EPF) accounts has been withdrawn.
Centre will review the proposal in wake receiving large number of representations from various stakeholders, he added.
In the budget presented by Jaitley on February 29, government had announced that 40 percent of an individual’s accumulated corpus in EPF and National Pension System (NPS) schemes would not be taxed during withdrawal.
This led to perception that the remaining 60 percent of the EPF corpus was taxable.
Speaking Lower House of the Parliament, finance minister said the proposal to keep 40 percent of withdrawals from the NPS accounts stays without change.
Withdrawal from EPF is completely tax-free and the budget proposal had led to protest from EPF subscribers and labour, calling the proposal as it as anti-worker.
EPF is country’s biggest social security scheme with more than 60 million workers are dependent on it for post-retirement savings.