How can govt justify taxing EPF when corporates get huge exemptions?
This government seems to have preconceived ideas against the provident fund (PF) and the employee’s security insurance (ESI) schemes. These are the very schemes that the government of India, until now, used to put before the whole world as exemplary social security schemes for workers.Updated: Mar 02, 2016, 09:00 IST
This government seems to have preconceived ideas against the provident fund (PF) and the employee’s security insurance (ESI) schemes. These are the very schemes that the government of India, until now, used to put before the whole world as exemplary social security schemes for workers.
In last year’s budget, finance minister Arun Jaitley announced that the government wanted to give options to provident fund subscribers to move into the national pension scheme (NPS). He also said people insured under the ESI scheme would have the option to shift to other insurance schemes available in the market.
This was opposed by workers and all central trade unions protested against the proposals as well, and, till today, the government has not been able to implement the schemes.
The finance minister has now come out with a proposal to tax 60% of the corpus of the PF at the time of withdrawal.
This, according to the government, is being done to put the PF scheme on par with the NPS and other pension plans.
This is purely unjust and unwarranted.
These savings of industrial workers are being actively utilised by the gover nment in development activities as a large chunk of the corpus is deposited in government securities.
And, it is also a fact that at least some of the workers are under the income tax net.
The government needs to withdraw the announcement made in the budget immediately.
I don’t want to go into what the revenue secretary said on Tuesday — that 60% of the interest earned on the PF amount will be taxed and not the principle amount; he is confusing people.
The finance minister needs to make an unequivocal statement a g ainst his decision to put speculation to rest.
Poor workers are being taxed by a government that is giving huge exemptions to corporates in the country. It is also announcing lakhs of crores of rupees as foregone tax.
In such a scenario, how can the gover nment justify its move?
(The author is the President of Citu. Views expressed are personal)