The GST revenue shortfall faced by the states is likely to come down with the improved collections in the last few months, Finance Secretary Ajay Bhushan Pandey said on Tuesday.
He said the Budget proposal of taxing interest on employee contributions to provident fund over `2.5 lakh per annum is aimed at correcting anomalies and is based on “principles of equity” and large depositors into the Employee Provident Fund (EPF) should pay tax on assured 8 per cent return.
According to the Budget, interest on employee contributions to provident fund over `2.5 lakh per annum would be taxed from April 1, 2021.
Pandey said people with less than `25 lakh annual income can continue to deposit 12 per cent into the EPF without paying any tax.
“There were anomalies in the system ... There are some cases which are depositing crores of rupee into the fund and there you are getting 8 per cent assured tax-free return. This is a question of equity.
This is against the Principles of Equity.If you have surplus money, you invest, but you have to pay tax,” Pandey told PTI.
Less than 1 per cent of the total six crore EPFO subscribers actually contribute more than Rs 2.5 lakh in the fund.
Pandey said the Budgeted 16.67 per cent growth in tax revenue is realistic and the pre-filled income tax return forms with details on interest from bank and Post Office, capital gains on listed securities and dividend income would be made available next fiscal.