PPF remains tax exempt; EPF interest post April 1 to be taxed

Revenue Secretary Hasmukh Adhia said the Budget proposal to tax 60 per cent of employee provident fund (EPF) withdrawal will affect less than one-fifth of employees with high salaries.

By: PTI | New Delhi | Updated: March 3, 2016 12:55 pm
epf, ppf, provident fund, epf tax, ppf tax, union budget, union budget 2016, taxation for salaried man, salaried taxation, taxable income under new budget Revenue Secretary Hasmukh Adhia said the Budget proposal to tax 60 per cent of employee provident fund (EPF) withdrawal will affect less than one-fifth of employees with high salaries.

Seeking to dispel fears of the salaried class, the government today said PPF will not be taxed on withdrawal and only the interest that accrues on contributions to employee provident fund made after April 1 will be taxed while principal will continue to be tax exempt.

Watch Video | PF Tax: Making Sense Of Govt’s Clarification

In an interview to PTI, Revenue Secretary Hasmukh Adhia said the Budget proposal to tax 60 per cent of employee provident fund (EPF) withdrawal will affect less than one-fifth of employees with high salaries.

Watch video: The Big Picture Of Arun Jaitley’s Budget 2016

The proposal, he said, is to tax the interest accrued on PF contributions made after April 1, 2016. “The principal amount will not be taxed and will continue to remain tax exempt on withdrawal. What we have said is 40 per cent of the interest accrued on contributions made after April 1 will be tax exempt and its remaining 60 per cent will be taxed.”

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This 60 per cent will also be tax exempt if it is invested in a pension annuity schemes, he said. “This is not a revenue mobilisation exercise,” he added.

Watch | How Will The Proposed PF Tax Affect You

Adhia said that no part of PPF will be taxed and the present scheme of investment up to Rs 1.5 lakh in a year will continue to be tax exempt. PPF on withdrawal will continue to be out of the tax ambit.

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  1. V
    vr
    Mar 1, 2016 at 9:48 am
    Whom is the govt trying to fool, feku said that mnrega was a failure last year, so why have it now? Big s!@p on his face , he doesn't have good chances in UP 2017 or in recent general elections of states
    Reply
    1. M
      MyTake
      Mar 1, 2016 at 10:19 am
      This time Modi Team has hit the Congies and the lefties big time from the left, Which will eventually result in hitting from the right as well!
      Reply
      1. A
        Ajay Ghuwalewala
        Mar 2, 2016 at 10:43 am
        Out of our EPF contribution, Rs.1250 is being deposited in Pension Fund. Instead of taxing the withdrawals on the interest of the corpus deposited after 1st April 2016, the EPS deduction can be increased, say to 1500. But the proposed taxation will create more confusion in the calculation plus, it won't be fair on the employees. Only 3 crores citizens are getting ry of 15k or less. What about the majority of the employees who are earning more. This point needs a sensible debate as the purpose is not justified.
        Reply
        1. a
          ak.dev
          Mar 1, 2016 at 9:13 am
          Jaitly mindless taxing of middle cl and Rajnath's incompetency to manage home will ensure that BJP is defeated in next general elections.
          Reply
          1. A
            Amal
            Mar 1, 2016 at 10:43 am
            Namo didnt say MNREGA is a failure, he said it was a living monument of UPA... UPA didnt kick off the plan well.. So Namo had to do it.. He never opposed the plan..
            Reply
            1. D
              Diplomat
              Mar 1, 2016 at 11:49 am
              When this amount is withdrawn at retirement, it will not be consumed immediately but will be placed in various other instruments such as FD. Govt will be getting tax on the interest at that time. So, why start from now? Also, whoever was thinking of retiring early (which indirectly gives opportunity to someone younger to get that job), will rethink now.
              Reply
            2. A
              A
              Mar 1, 2016 at 9:50 am
              This us a very bad move by FM This is the only corpus available for majority of the ried cl to meet the expenses in the evening of their life If not withdrawn next election BJP will be voted out of power by the working cl
              Reply
              1. A
                arc
                Mar 1, 2016 at 12:30 pm
                No matter what modi toadies say in praise of the budget, I think nda has given the ried cl vote on a platter to the opposition.whether farm vote will compensate is to be seen.
                Reply
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