AGENCY
New Delhi: Clearing the air on taxing provident fund withdrawals, the government on Tuesday said PPF withdrawals will continue to be fully exempt from tax and only interest accruing after 1st April on 60 per cent of the contributions made to Employee PF will be taxed.
All contributions and interest accrued to Employee Provident Fund (EPF) before 1st April, 2016, will not attract any tax on withdrawal. Withdrawal of principal amount contributed to EPF after 1st April would also remain exempt from any tax.
It is only the interest on contributions made after 1st April, 2016 which will be taxed, Revenue Secretary Hasmukh Adhia told PTI in an interview here.
“There is no change in the status of Public Provident Fund (PPF). EEE (tax exempt at the time of contribution, tax exempt on returns and tax exempt on withdrawals) scheme will continue for PPF,” he said. “There is no 40 per cent limit on PPF. It will be 100 per cent exempt”.
Adhia said out of the 3.7 crore active contributors in EPF, about 70 lakh corporate sector employees with high salary would be impacted by the proposed taxation of EPF interest on withdrawal.
“There are about three crore people whose monthly income is less than Rs 15,000. They are called eligible members of EPF.
For this Three crore people, there is going to be no change in status of taxation. They can withdraw their 100 per cent corpus when they retire without any taxes,” Adhia said, adding that the distinction would be made clear in the notification.(PTI)
