Representation to the #FinanceMinister to #Rollback #EPATax

ALERT CITIZENS FORUM OF INDIA
March 2, 2016
The Hon. Finance Minister,
Government of India,
New Delhi.
Sub: Request to roll back the Tax on Employees Provident Fund announced in the Union Budget.
Respected Sir,
As propos the above, we wish to submit as under:
1) In a significant Budget announcement your goodself has stated that that interest on 60% contribution to Employees’ Provident Fund scheme will be taxed.
2) The reason being given for this is to simplify the schemes and bring them all on par, with other schemes like the National Pension Scheme.Though initially it was felt  that the entire 60% would be taxed, the government later clarified that only interest on 60% amount will be taxed.
3) This announcement has evoked strong reactions from workers and unions across the country because this is a sentimental issue. In a country with non-existent social security, it is unfair to tax people's savings after working after a life time. Even if it is tax on interest in the 60%, it won't be received very well. There are other ways for the government to raise funds.
4) How can the government justify its decision to tax the accumulated EPF money when the employees have already paid tax on their income? This is like taxing the employee two times. We oppose the proposal.
5) Every month, every employee puts 12% of their salary into the savings account, and the company puts 12% from their end. Companies can cap the amount for EPF at Rs. 1800 each. EPF is compulsory, and the amount being deposited is exempt from tax at the time of deposit.
6) You get interest on the deposited amount every year, and that is not taxed either.
When you retire at 58, you can take it all out – and that’s tax free. That was the position before the budget.
7) But as per your announcement - that interest on 60% contribution to EPF will be taxed at exit. The tax will be applied only for money deposited from April 1, 2016.
8) Now, Revenue Secretary Mr. Hasmukh Adhia has informed that there will be no tax on the money withdrawn if it is being re-invested in annuity or pension products for earning regular income.
9) Sir, this is a trap very wilyly set up by the Insurance companies. In effect it means that the government wanting to force employees to keep the money in pension products even after retirement.
10)  People don't take out PF money to put it into an annuity, they take it out because they need it. When you withdraw your savings at retirement, you do it because
you really need the money, for say buying a property to settle down, will it be fair to tax them ?
Announcing measures for moving towards a pensioned society, your goodself have said, "Pension schemes offer financial protection to senior citizens. I believe that the tax treatment should be uniform for defined benefit and defined contribution pension plans."
You have also said that the annuity fund which goes to the legal heir after the death of pensioner will not be taxable.
It is in today’s newspapers that the government proposes to tax only the interest component of the withdrawal.
However, a government press note issued yesterday made no mention about taxing only the interest.
It claimed that the new tax proposal was aimed at taxing only the high salaried individuals totaling about 70 lakh people out of the 3.7 crore employee provident fund (EPF) members. About 3 crore individuals come under the statutory wage limit of Rs. 15,000 per month so will not be affected by the proposed changes.
Sir, this proposal is a clear case of double taxation and will affect the entire middle class – who have always been strong supporters of the BJP.
In view of all of above, we request you to roll back the announcement and provide relief to the working class and salaried class of the country.
With Best Regards,
For ALERT CITIZENS FORUM OF INDIA,
Dayanand Nene
President
Governing Council : Jitendra Satpute, Prasad Bedekar, Kiran Joshi, Sandhya Malhotra, Anil Ghodke, Adv Shrirang Mulye.