The Centre rolled back on Friday a decision to lower the interest to 8.7% on the Employees Provident Fund (EPF) and said deposits will earn 8.8% interest for 2015-16 as originally recommended by the Central Board of Trustees, EPFO’s apex decision-making body.
The decision is the newest in a series of multiple rollbacks made by the NDA government.
1. On April 25, the government informed Parliament that the finance ministry had approved an interest rate of 8.7% as against the Central board of trustees (CBT)’s recommendation of 8.8%. The decision was rolled back on Friday following nationwide protests called by trade unions.
2. In a notification issued last February, the labour ministry restricted 100% withdrawal by members unemployed for two months or more. Instead, individuals, it said, will be able to withdraw only their contribution to the fund and the interest earned on it, and not the employer’s contribution. The rules also barred subscribers from claiming PF before they turn 57. The notification was withdrawn on April 19, following violent protest by garment factory workers in Bangaluru.
3. In March 2016, amid mounting opposition from labour unions and the salaried class, the government withdrew the controversial budget proposal to tax provident fund withdrawals. In the budget presented by finance minister Arun Jaitley on February 29, the government had announced that 40% of an individual’s accumulated corpus in EPF and National Pension System (NPS) schemes would not be taxed at the time of withdrawal. This was taken to mean that the remaining 60% of the EPF corpus was taxable.
4. In the Budget for 2015-16, finance minister Arun Jaitley had proposed to scrap Minimum Alternate Tax (MAT)--a kind of tax on corporate income--on capital gains made by foreign institutional investors (FIIs). Around the same time, the tax department issued notices to 68 FIIs seeking Rs 602 crore as unpaid MAT at the rate of 20% on capital gains made by FIIs over the past few years. In September 2015, the government relented and announced that FIIs would not have to pay any MAT for past years.
5. Four days after an across-the-board hike of 14.2% in passenger fares were announced, then Railways Minister D V Sadananda Gowda ordered a partial rollback to provide relief to second class suburban passengers for a travel of a maximum of 80 kilometers per day on June 24, 2014. The fare rollback – which benefited large number of passengers traveling on the Mumbai suburban – was announced following pressure from the NDA alliance partner, Shiv Sena. Gowda announced the rollback decision within hours of his meeting with a delegation of Shiv Sena MPs.