Finance Minister hints at review of tax limit on EPF

Finance Minister Nirmala Sitharaman has mentioned there is no such thing as a intent to discourage increased earnings earners from saving with the Employees Provident Fund (EPF) and that she was open to reviewing the contribution limit of ₹2.5 lakh a year for tax-free interest, imposed within the current Union Budget.

Reiterating that the EPF will proceed to stay in its current kind, the Minister mentioned there was no plan to merge the EPF with the National Pension Scheme.

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“We want to continue with the EPF. We understand that there is a certain comfort with people, particularly middle income earners when they are assured of a return,” she mentioned in an unique interview with Business Line.

“We have taken a call not to discourage those earning more than ₹15,000 from being part of EPF,” she added.

There can all the time be a dialogue on the ₹2.5 lakh limit. I can return and review it. But it’s a matter of precept. We are solely touching those that are placing excess of what a mean Indian’s earnings is per thirty days,” she added.

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The Finance Minister has proposed within the funds to tax curiosity earned on EPF contribution of greater than ₹2,50,000 yearly.

Realistic numbers

Ms. Sitharaman mentioned the numbers within the Budget are sensible, each in phrases of notion and in what will be achieved. “Every number has been repeatedly vetted for being achievable. This is a Budget that has been put through the wringer repeatedly to get it closer to what is achievable,” she mentioned.

Asked if the disinvestment target of ₹1,75,000 crore is just too modest, she replied that it might seem like so. “But I would rather be cautious than stand up and say later that I went wrong,” she mentioned.

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The Finance Minister confirmed that no resolution had been made but on which banks to privatise — the profit-making banks, smaller banks or massive ones. In the context of the proposal to launch improvement monetary establishments (DFI), she mentioned the thought was that long-term infrastructure funding will likely be accomplished by these establishments. “Banks must focus on the primary business of lending for commercial purposes, rather than getting choked by sourcing short-term deposits and lending to long-term projects. There should be a marked difference between the portfolios of DFIs and commercial banks,” she mentioned, including that the DFI concept will likely be applied “as soon as possible”.

Levies on gas

Asked why the Centre was not decreasing excise obligation on petrol and diesel regardless of the sharp climb of their retail costs, Ms. Sitharaman mentioned the Centre and States ought to sit collectively and see how finest to deal with the problem. “Taking into GST can be an option. That will certainly bring it to one rate all over the country. The GST Council can deliberate and take a position on it, but then, the fact is, it is both the Centre and States even then,” she mentioned.

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“Jugaad” ideology

Answering a query on whether or not the Prime Minister’s speech in Parliament defending wealth creators represents a shift within the authorities’s philosophy, Ms. Sitharaman mentioned the federal government was by no means far faraway from the BJP’s financial ideology.

“This country had gone too far in reiterating a socialist and what I would call an imported jugaad ideology made from tweaking imported ideas and constantly adding to them in the hope that they would somehow fit the country,” she mentioned.

“There also needs to be recognition that socialism is not the only ideology that has a copyright on welfare. When the economy does not do well and wealth isn’t generated, then social good suffers and so does the welfare state. We are trying to reinforce that lawfully earning money is not wrong. A tax regime that is not oppressive or adversarial can generate sufficient revenues to fund welfare,” she added.

Read the total interview here.