Roll back of 60% taxation of EPF/NPS withdrawal announced

Roll back of 60% taxation of EPF/NPS withdrawal announced

The Finance Bill, 2016 (Budget 2016-17) had proposed income tax on 60% of the total corpus of Recognised Provident Funds (including EPF) and NPS at the time of withdrawal.

However after severe criticism of the Government, the Finance Minister Shri Arun Jaitley has today in Lok Sabha announced the much anticipated roll back of the proposal as under

“In the present reform, the policy objective is not to get more revenue but to encourage people to join the pension scheme. There are various other suggestions received which can also achieve the same policy objective of encouraging people to join the pension scheme.

In view of the representation received, the Government would like to do a comprehensive review of the proposal and therefore I withdraw the proposal in paragraph 138 and 139 of my budget speech.

The proposal of 40% exemption given to NPS subscriber at the time of withdrawal remains.”

• No changes propsoed in Section 87A Rebate for AY 2027-28 (FY 2026-27) in Budget-2026-27
• No changes in Income Tax slabs or rates for individuals/HUFs for AY 2027-28. Budget 2026-27
• Union Budget 2026-27 watch Live – Highlights of direct and indirect tax proposals
• Supervisory with wages exceeding Rs. 18000 p.m. not a worker under Code on Wages 2019
• ITAT has power to stay order appealed, even in absence of any subsisting tax demand