Finance Minister Nirmala Sitharaman (File Image)
Finance Minister Nirmala Sitharaman said she is “open” to revising the Rs 2.5 lakh annual tax-free deposit cap on Employees’ Provident Fund (EPF) savings announced in the Union Budget 2021.
In her Budget speech on February 1, Sitharaman announced that depositors investing more than Rs 2.5 lakh in EPF in a year would have the interest liable for tax. The move is being seen as an attempt to block higher-income earners from using EPF savings to reduce tax.
Speaking to the Hindu BusinessLine on February 21, the finance minister said this could be “open to review” and also denied that it was aimed at discouraging high-income earners from saving in EPF.
“We have taken a call not to discourage those earning more than Rs 15,000 (per month) from being part of EPF. There can always be a discussion on the Rs 2.5 lakh limit. I can go back and review it. But it is a matter of principle. We are only touching those who are putting far more (in EPF) than what an average Indian’s earnings is per month,” she added.
Sitharaman also said there was s “no plan to merge EPF with the National Pension Scheme (NPS)” and these would continue to “remain in its present form.”
Acknowledging that people “particularly middle-income earners drew certain comfort from EPF” due to assured return, the finance minister said she would want it to continue.
Commenting on the Budget 2021, Sitharaman said she was confident that “every number has been vetted for being achievable”, adding it was “put through the wringer repeatedly”.
On divestment target, she said the target set could appear to be modest, but she would “rather be cautious than stand up and say later that I went wrong”.
She also said was it had not“yet been decided” which public sectors banks were to be privatised. In the last few days, some names have been thrown around as buzz over privatisation of PSU gets louder.
Sitharaman also put the onus of managing the fuel prices on the states when asked why the Centre was not reducing excise duty despite runaway prices. “Centre and states should sit together and see how best to handle the issue. Taking it into the GST net can be an option—that will certainly bring it to one rate all over the country. The GST Council can deliberate on it and take a position on it, but then, the fact is, it is both the Centre and states even then,” she said.