FM Arun Jaitley to clarify govt position on taxing PF withdrawal soon: Shaktikanta Das

The government may reconsider its Budget proposal to tax provident fund withdrawals , Shaktikanta Das, Secretary, Economic Affairs, Ministry of Finance said.

In an interaction with the executive committee members of the Federation of Indian Chambers of Commerce and Industry (FICCI) in Delhi on Friday, Das said that "an announcement in this regard will be made by the Finance Minister in the Parliament very soon".

How much tax do I have to pay? Calculate now

Ever since the tax proposal was made, finance ministry has been flooded with suggestions and representations on the topic. The industry had suggested that if 60 per cent of corpus under recognised Provident Fund is not invested in the annuity products, the tax should be levied only on accumulated returns on the corpus and not on the contributed amount.

Das explained that the Budget proposals were not intended to increase the tax burden, but to encourage more private sector employees to go for pension security after retirement instead of withdrawing the entire money from the provident fund account.

Towards this end, the Finance Minister had announced that 40 per cent of the total corpus withdrawn at the time of retirement will be tax exempt both under recognised Provident Fund and NPS, he pointed out.

The Finance Ministry had expected that the employees of private companies would place the remaining 60 per cent of the corpus in annuity, out of which they can get regular pension.

The entire corpus will be tax free if invested in annuity.

Speaking on the occasion, Ram Tirath, member (budget), Central Board of Excise and Customs, said that the government is setting up 11 new benches of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to fast track dispute resolution measures. He added that the government has made an effort to address the issues of duty inversion and retrospective legislations for enhancing ease of doing business.