Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT Audit :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4% :: form 3cd :: articles on VAT and GST in India :: cpt :: ACCOUNTING STANDARDS :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment
« Service Tax »
 GST Network to begin accepting fresh registrations from June 25
 Indian GST is significantly unique, but is it better?
 GST example of national integration
 6 reasons you need not fear the GST regime
 Tax return filing extension on GST may not be enough
 GST: ‘Tech readiness, tax administration key challenges’
 GST return filing rules relaxed for Jul-Aug, July 1 rollout
 GST Council gives return filing breather to India Inc for 2 months
 All eyes on 18 June as GST Council meets to iron out niggling issues
 GST Council's June18 meet to finalise e-way bill, anti-profiteering rules
 Valuation of Tax liabilities Under GST Regime

Government to move amendment to EPF tax proposal
March, 02nd 2016

Union Finance Minister Arun Jaitley will move an amendment to the budget proposal on the taxation of withdrawal of investments from the Employees’ Provident Fund.

The criticism of the proposal forced a reconsideration, a top government official told reporters, speaking on condition of anonymity, as the “Finance Bill is now a property of the House.”

The amended proposal will make only the interest accrued on 60 per cent of the contributions made after April 1, 2016 taxable, the official said.

An official release on Tuesday said Mr. Jaitley would consider all suggestions. “We have received representations today [on Tuesday] from various sections suggesting that if the amount of 60 per cent of corpus is not invested in annuity products, the tax should be levied only on accumulated returns on the corpus and not on the contributed amount,” it said.

Still confusion on the intention of this proposal remained through the day despite the official statement, including from Revenue Secretary Hasmukh Adhia. The confusion was caused by the speech and the Finance Bill Mr. Jaitley tabled to amend the Income Tax Act for this provision as they say separate things.

While as per the Finance Minister’s budget speech, 60 per cent of the total corpus, which consists of employer’s contribution, employee’s contribution and interest on both, will be taxable on withdrawal, the Finance Bill says something else. The Bill proposes amendments to the Income Tax law that will make 60 per cent of the employee contributions part, of the accumulated balance, tax free. “While the Finance Bill seeks to tax the corpus, the government has received representations suggesting that the tax should only be on the interest accrued... Therefore, the Finance Minister has agreed to revisit the budget proposal,” Mr. Adhia told The Hindu.

The new proposal under consideration is that interest accrued on 60 per cent of contributions made after April 1, 2016 will not attract any tax on withdrawal unless invested in an annuity plan, Mr. Adhia said. The contributions and interest accrued to the EPF before that and the withdrawal of principal after the cut-off date would remain tax-free, he said.

The official statement reiterated the position in the budget documents.

Of the total corpus, 40 per cent withdrawn at the time of retirement will be tax exempt in the case of recognised provident fund and the NPS, it said. In the case of employees of private companies, if they place the remaining 60 per cent in annuity, out of which they can get regular pension, no tax is chargeable, it said. In other words, according to the release, the entire corpus will be tax-free, if invested in annuity.

The other change, according to this release, introduced by the budget, is that when the original corpus goes in the hands of the heirs on the death of the person investing in annuity, then again there will be no tax. The budget proposal does not affect three crore subscribers of the around 3.7 crore contributing members of EPFO as their investments within the statutory wage limit of Rs.15,000 a month, the release said. The proposal affects only about 60 lakh contributing members who have accepted EPF voluntarily and they are “highly-paid “employees of private sector companies, who can withdraw their savings without any tax liability, it said. “We are changing this... What we are saying is that such an employee can withdraw without tax liability provided he contributes 60 per cent in annuity product so that pension security can be created for him according to his earning level… However, if he chooses not to put any amount in annuity product, the tax would not be charged on 40 per cent,” the release said.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Custom Software Development Outsourcing Custom Software Development Offshore Cus

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions