Nitish Kumar Attacks Centre Over Provident Fund Tax Move

New Delhi: Bihar Chief Minister Nitish Kumar has attacked the Centre over its plan to tax pension withdrawals by private sector employees saying that the move has jeopardised the future of the youth.

In his Union Budget announced on Monday, Finance Minister Arun Jaitley proposed taxing lump-sum withdrawals exceeding 40 percent of an individual's retirement pot in the Employees' Provident Fund (EPF), unless the sum is reinvested in a pension product such as an annuity.

Even though he clarified the tax would be applicable on contributions to be made after April 1 this year, the move has drawn a backlash forcing the government to consider a roll-back or measures to water down the proposal.

As uncertainty loomed over the fate of the plan, Mr Kumar today targeted the government on Twitter.

GOI has barely delivered on their promise of creating jobs & now a tax on EPF further puts the financial future of our youth in jeopardy.

- Nitish Kumar (@NitishKumar) March 5, 2016

He also attacked the Mr Jaitley's Budget saying that with the imposition of new cesses, the Central government had "further swindled" the share of states in funds.

The pensions tax plan has sparked fury among India's small but vocal professional class - only around 3.7 crore of the country's 130 crore people contribute to the EPF.

If implemented, the tax plan could hit lakhs of employees who pay up to 33 percent tax on income, forcing them to explore other options to save for their old age.