New Delhi: Prime Minister Narendra Modi has asked Finance Minister Arun Jaitley to “explore ways to review” the new Budget proposal to tax Employees’ Provident Fund or EPF withdrawals, sources have told NDTV.
In his budget, Mr Jaitley had proposed that after April 1, 2016, 60 per cent of the amount deposited in the EPF account of the employee will be taxable at the time of withdrawal, and 40 per cent will be tax free.
Earlier, the entire amount was tax free at the time of withdrawal if the employee has completed five years of continuous service.
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.
Sources say the government is now considering proposals to tax only the returns on withdrawal and also a possible rollback of the proposal.
While taxing the interest on the withdrawal would need only a clarification of intent in Parliament, a rollback may need an amendment which may be moved when the Budget comes for discussion in the Lok Sabha.