With reference to the report, "Govt buries EPF tax" (March 9), while making a statement withdrawing the proposal in paragraphs 138 and 139 of the Budget speech, Finance Minister Arun Jaitley said the government would like to do review it comprehensively. The way in which the proposal was rolled back denied Parliament an opportunity to take an informed view on the government's plan to "move towards a pensioned society".
The blame for this should be shared equally by the government - for drafting measures without considering their implications - and the Opposition - for trying to claim credit for defeating a government proposal without waiting for the debate on the Finance Bill in Parliament to express its views.
Let us hope a parliamentary committee supported by expert views will study the pros and cons of all initiatives taken since 2003 when the New Pension Scheme - known as National Pension System (NPS) at present - was introduced through an executive order without any legislative sanction. There was no opposition to the move then, as the NPS was made applicable to employees joining service after the introduction of the scheme.
In the interest of implementing all retirement savings schemes smoothly, they should be made tax-free. This is consistent with the government's approach to make dividends tax-free in the hands of payees. The government can, when there is a need to do so, tax the return on investments made by fund managers.
All these steps should not end up diverting regular retirement savings to insecure financial instruments or reducing the returns on such savings invested in long-term savings instruments like provident fund, pension fund or insurance by savers. Such an eventuality will have adverse implications for the future savings pattern and more significantly, for social security schemes.
M G Warrier Mumbai
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