March 2nd, 2016 / 8:50 PM
Image Source: financialexpress
The recent budget whipped up a storm among the citizens when it was announced that withdrawal from the EPF will be taxed. The finance minister proposed “taxing 60 per cent of the withdrawal from employees’ provident fund (EPF) on contributions to be made after April 1, 2016“. The measure smacks of brutality on citizens who pay various taxes.
Let us break it down to the following questions
What is EPF?
Employee’s Provident Fund (EPF) is a retirement benefits scheme that’s available to all salaried employees. This fund is maintained and overseen by the Employees Provident Fund Organisation of India (EPFO) and any company with over 20 employees is required by law to register with the EPFO. It’s a savings platform that helps employees save a fraction of their salary every month that can be used in the event that you are rendered unable to work, or upon retirement.
Why was it wrong to tax EPF?
Rich traders and professionals get away without paying tax and the tax base remains constricted. for instance
1.) This year’s write-off on excise duty for gold and diamonds is Rs 61,126 crore compared to Rs 44,926 crore in 2014-15.
2.) The overall excise and customs duty foregone is to the tune of Rs 4,82,489 crore continuing on the increasing trend which last year was Rs 4,35,756 crore.
3.) In 2014-15, the government is estimated to have foregone Rs 62,399 crore as incentives to corporate taxpayers, up from Rs 57,800 crore a year ago.
Despite all these waivers mentioned above and many others not mentioned, it is only the salaried citizen who is at the receiving end of the brutal taxation laws. Taxing the salaried citizen should be the last thing in mind given the enormous contribution through taxes and expenditure a salaried citizen is making.
What is the Government’s intention?
The government claims raising revenue for the government was not the original intention. Rather it claimed
1.) To make India more insured and pensioned society as the Budget provision provides for no tax on EPF withdrawal if it is invested in pension-based annuities.
2.) The government has also said that the tax will be on the interest rate accrued and not on the principal amount.
The Logical Indian shares the frustrations of many citizens who have voiced their discomfort with the new tax proposal. We demand immediate rollback of the proposed taxation on EPF. If the government cannot bring relief to the citizen, it should not burden them with additional taxes.
To raise your voice against the EPF tax, you can do so through the following link and sign the petition