EPF reform long due, not to mop up revenue: Hasmukh Adhia

Revenue secretary Hasmukh Adhia says the tax on EPF contribution is not a revenue mobilization measure and finance minister Arun Jaitley will take a call on the issue when he replies in Parliament. He also says that the government has announced a plan to settle retrospective taxation but will not reach out to investors to avail of the benefit. Excerpts:

There is a concern that on EPF you’re changing rules midway for several subscribers?

I don’t think it is possible to grant relief for their entire life. Reform is then not possible. We have to take a call on this. This was a reform highly due; that’s why it has come about. The idea is not to tax. It is not a revenue mobilisation. It is an encouragement for subscribers to take annuity products when they retire. We have to encourage them to save when they retire.

Does it take away subscribers’ flexibility? Some buy a house using this money, or use it for children’s education…

Flexibility is not being taken away. It is only an instrument of taxation that we’re using to incentivise him. If he still wants to retain flexibility, it comes at a cost.

Is it a conscious move to push NPS?

Not at all. It is a push for the EPF as well as the NPS subscriber to buy annuity instead of withdrawing the whole money and blowing it up.

Will there be any rethink on this issue of taxation of EPF?

There have been representations. They will keep coming in Parliament as well. The FM will take a final call when he replies to this.

What is the rationale for introducing a compliance window for domestic black money?
The rationale has been only one. This government has been tightening tax evasion from all angles by having a separate PAN reporting requirement, emphasising on cashless society. Also, various investigating agencies put pressure. Reason why in the last two years, IT department’s investigation wing unearthed undisclosed income worth Rs 20,000 crore. People said since it’s been done for foreign black money, why not a similar scheme for domestic people whose income has escaped taxation? Maybe they want to come forward because there will be less unpleasant action later.

Do we see more action against those who haven’t declared their black money?

It’s already happening but still FM has said this is one opportunity we want to give the domestic people. After that we’ll focus on crackdowns on evaders.

Why was the retrospective amendment not scrapped?

The government in its wisdom in July 2014 had considered that option. It was not adopted. The government in July 2014 said it will not pursue retrospective amendment but existing cases will follow the legal route. The Union government continues to hold that position except that one window’s been given.

Will you reach out to people to avail of the window?

No question of reaching out. They know about the scheme. It is available. There is no question of haggling on the figure of settlement. It is openly available to anybody willing to accept that.

Statements from companies show that they are not upbeat about it?

It is for them to take a call.