EPF tax move will shake party core base: BJP MPs
BJP MPs are upset over the Budget proposal to tax EPF corpus at the time of withdrawal, a move they fear will antagonise the party’s core support base of the middle class. A day after he made the announcement, Finance Minister Arun Jaitley explained to party parliamentarians and allies that the decision was taken to “promote savings” and create a “pensioned” society.
Addressing the BJP parliamentary party meeting — its allies were also invited Tuesday — Jaitley said there were “some misgivings”on the Budget proposal that it meant to “tax the provident fund” and that it would broken into the retirement savings.
“He has explained that only the interest on 60 per cent of the corpus will be taxed and the principal amount will remain untouched at the time of withdrawal. What he said was this move is to help senior citizens, promote savings, discourage premature withdrawals and create a pensioned society,” a source who attended the meeting told The Indian Express.
Jaitley gave this explanation in the presence of Prime Minister Narendra Modi and BJP chief Amit Shah.
Sources said the Finance Minister had been apprised of the “unhappiness” among party MPs, who pointed out that this move had disturbed the middle class, a core support base of the BJP. Although the allies too had expressed apprehensions about the move, Naresh Gujral of the Shiromani Akali Dal, who was present at the meeting, said the explanation by the Finance Minister satisfied him. “I am in favour of it because the savings rate in India is going down. There is a need to encourage it and this is a well-thought-out move,” Gujral said.
But not many were convinced. “Jaitleyji has presented a good budget for the rural sector and the farmers, but the Budget has antagonised the middle class. This will be very damaging to us electorally. We will push the FM to review this proposal,” a BJP MP said. “For a party that always looks at the social media for impact, it should not miss the angry reactions with a hashtag #RollBackEPF,” he said. The RSS-backed Bharatiya Mazdoor Sangh (BMS) opposed the proposal, calling it an “anti-working class move” and “a clear case of double taxation”. “First they cut income tax from our salaries. Now they want to tax our savings too. For many workers, EPF is the only saving,” Pawan Kumar, zonal organising secretary of the BMS, told The Indian Express.
BMS general secretary Virjesh Upadhyay said: “Tax should be imposed on new income. PF accumulation is not generated or new income. The Finance Ministry has encroached upon the authority of the Central Board of Trustees, the apex decision making body of EPFO, which takes a final call on all issues related to EPFO schemes.”
Kumar said the organisation will first try to negotiate with the government. “We will meet PM and Finance Minister seeking withdrawal of this proposal. Otherwise, we will take our protest to the streets,” he said.
