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<ul><li>Employees can now withdraw 75% of the <keyword id="114854" type="ORGANIZATION" weightage="20" keywordseo="Employee-Provident-Fund">Employee Provident Fund</keyword> (<keyword id="45027" type="ORGANIZATION" weightage="20" keywordseo="EPF">EPF</keyword>) if they’ve been unemployed for a month. </li><li>This also means that the EPF account won’t be shut. </li><li>The continuity of the EPF account is crucial for pension and taxation on withdrawals.</li></ul>There have been a number of changes made to the Employee Provident Fund (EPF) over the past couple of years, so many that it is sometimes hard to keep track of. Most recently, however, the big change has been that subscribers can <a href="https://www.newsx.com/business/epfo-allows-members-to-withdraw-funds-for-marriage-house-purchase">withdraw 75% of their EPF balance</a> provided that they’ve been unemployed for at least a month. And, you won’t have to close your account. This is important because according to earlier rules if someone’s been unemployed for more than two months, they could withdraw their entire balance. But, that also meant that they would have to discontinue their account. The account lives on The EPF is the <a href="https://www.bankbazaar.com/tax/all-about-epf.html">culmination</a> of your contribution, your employer’s contribution and interest accrued on that principal amount. So, this measure lets you liquidate your investment like an advance against the principal. Liquidity may be the short-run gain, but in the long-run, the survival of the EPF account is much more significant. As per the rules of the Employee Provident Fund Organisation (EPFO), in order for a subscriber to be <a href="https://www.businesstoday.in/current/economy-politics/epfo-pf-withdrawal-procedure-employer-employee-salary/story/279312.html">eligible</a> for pension, they have to maintain their EPF account for at least 10 years. In case the account shuts down before the stated time period, the process will have to be started all over again with a new account. So since your account won’t be discontinued if you’re withdrawing 75% of your EPF, it will remain eligible for pension. That being said, the continuity of your account is also important for <a href="https://www.bankbazaar.com/saving-schemes/pf-withdrawal-rules.html?ck=Y%2BziX71XnZjIM9ZwEflsyDYlRL7gaN4W0xhuJSr9Iq7aMYwRm2IPACTQB2XBBtGG&amp;rc=1">taxation</a> purposes. Any withdrawals that are made from the EPF account before five years are taxable. But should your account stay intact, the withdrawals are completely <keyword id="880043" type="PERSON" weightage="20" keywordseo="Tax-free">tax-free</keyword> after the first five years. The withdrawal you make if you’ve been unemployed for a month is tax-free in either situation, but the interruption would affect withdrawals for marriage, education, home loans etc. And, it’s not just the interest that’s taxed. It’s the principal amount as well. Overall, the EPFO has taken progressive steps towards evolving the fund for today’s market even though the latest interest of 8.55% is the <a href="https://www.financialexpress.com/money/epfo-alert-modi-government-to-notify-8-55-interest-on-provident-fund-this-week-check-details-here/1157155/">lowest</a> it has witnessed in 5 years. They’ve introduced equity traded funds (ETFs) instead of being limited to fixed income instruments. Reports say that the EPFO may even have plans of letting subscribers <a href="https://economictimes.indiatimes.com/wealth/personal-finance-news/epfo-members-to-get-option-to-hike-investments-in-etfs-by-this-fiscal/articleshow/63815546.cms">choose</a> the amount of money they would want to be put into equity instead of the blanket 15% implemented right now.

Here's why the new EPF rules make good sense in the long-run

As investment instruments, <keyword id="76579" type="CITY" weightage="20" keywordseo="PPF">PPF</keyword> (Public Provident Fund) and <keyword id="45027" type="ORGANIZATION" weightage="20" keywordseo="EPF">EPF</keyword> (Employees' Provident Fund) have a lot of things uncommon between them. Basically speaking, the decision to invest in a PPF scheme rests with the investors while EPF is automatically deducted from the salary of the salaried class of people. Both these investment options enable the investors cave on taxes. Section 80 C of the Income Tax Act of 1961 makes both <keyword id="8113458" type="UNKNOWN" weightage="20" keywordseo="PPF-and-EPF">PPF and EPF</keyword> investments eligible for a range of income tax benefits. Overview of EPF and PPF In India, two types of provident funds are popularly known namely Employees’ Provident Fund or EPF and Public Provident Fund or PPF. Under the existing regulations, EPF is automatically deducted from the salary of the salaried class individuals by their employees and paid into their respective EPF accounts maintained with the EPF department under the auspices of the Government of India. The choice to invest in a PPF scheme solely rests with the investor. This means that if you are a salaried individual, you do not have a choice not to subscribe to the EPF scheme. Hence, the deductions will be invariably made from your salary to be invested into your EPF account. But, whether you wish to invest in a PPF scheme is purely optional. EPFO or Employees Provident Fund Organization is a retirement fund body that governs the EPF scheme. PPF scheme is offered by the Government of India through banks and post offices. How do these schemes compare Interest rates The government decides the interest rate of PPF year on year depending on several factors related to the country’s economy. Over the past several years, the interest rate of EPF contributions had never come down below 8.5 percent. The government decides the interest rates of PPF during every quarter. For the quarter ending in June 2018, the interest rate for PPF investments was fixed at 7.6% for example. Since the PPF investments come under the Exempt, Exempt, Exempt category, the returns are completely exempt from taxes. The principal amount, the maturity amount and the benefits earned on the investment are all qualified for tax exemption. How the EPF and PPF schemes operate If an individual works with a company that has more than 20 people on its rolls, EPF deduction is compulsory. The salaried employee contributes about 12 percent from their monthly salary towards EPF. The employer has to contribute an equal share of 12 percent which will be deposited in the employee’s account along with the employee’s contribution. Any citizen who is a resident of India can open a PPF account. To open a PPF account it is not necessary that the individual must be a salaried person. Members of Hindu Undivided Families (HUF) cannot open a PPF account. The tenure of investment in case of a PPF account is 15 years. Once this period expires, the investment can be extended for another 5 years. From the third financial year of opening the account, the investor can take a loan from the PPF account. From the seventh financial year, the investor can make partial withdrawals from this account.

What is the difference between PPF and EPF

After facing major backlash over bringing the EPF under the <a href="http://www.businessinsider.in/searchresult.cms?query=tax">tax net</a>, <a href="http://www.businessinsider.in/searchresult.cms?query=arun+jaitley">Finance Minister Arun Jaitley</a> finally roll-backed the proposal of taxing the withdrawal of over 40% of the <a href="http://www.businessinsider.in/searchresult.cms?query=EPF">Employees' Provident Fund</a> (EPF). 
 
The common man was unhappy after Jaitley, in his <a href="http://www.businessinsider.in/searchresult.cms?query=budget+2016">Budget 2016-17</a>, had announced tax on lump-sum withdrawals, which dented the plans of pensioners. 
 
Now, the EPF has become fully tax-free, a huge relief to salaried workers. 
 
People who had just entered the EPF would have been the worst affected because of this proposal. 
 
Currently, a company can contribute up to 12% of the basic component of someone's salary as EPF. 
 
(Image: Indiatimes)

Gone. Arun Jaitley withdraws the unpopular EPF
taxation proposal!

Facing sharp criticism over bringing employee provident fund withdrawals under tax net, Finance Minister <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> is mulling over a partial rollback. 
 
Jaitley said he will announce the final decision on the matter during Budget debate in the Parliament. 
 
While announcing the Budget 2016-17, Jaitley proposed taxing 60 per cent of the withdrawal from Employee Provident Fund (EPF) on contributions to be made after April 1. 
 
The decision attracted criticism and many petitions against the same. 
 
In his clarification, Jaitley said the move was aimed at high-salaried class and not the overwhelming section of 3.7 crore EPF members. 
 
"The revenue department had considered various aspects of the National Pension Scheme and Employee Provident Fund Organisation (EPFO). Their intention is not revenue raising, that was not the principal intention," he said. 
 
With the proposal being attacked by various employees unions including RSS-backed BMS and political parties who termed it as "an attack on the working class and a clear case of double taxation," the government yesterday said it was to limit the tax only to the interest accrued. 
"Now there has been some reactions. When the debate comes up in Parliament I will give the government's response as to what decision we finally take in this matter," he said. 
 
Jaitley said the objective behind the proposal was that no tax is levied on 40 per cent of the withdrawal which can be used for meeting retirement commitments. 
 
(Image: Indiatimes)

Govt
rethinking its decision to tax interest on EPF

After <a href="http://www.businessinsider.in/searchresult.cms?query=rahul+gandhi">Congress vice-president Rahul Gandhi</a> took credit of rollback of proposal to <a href="http://www.businessinsider.in/searchresult.cms?query=EPF">tax EPF withdrawal</a> saying that his pressure worked, the BJP mocked his claim. 
 
<a href="http://www.businessinsider.in/searchresult.cms?query=arun+jaitley">Finance Minister Arun Jaitley</a> withdrew his proposal to bring EPF under the tax net. To this, the Nehru-Gandhi scion said, “"My pressure worked... I had warned the government against suppressing salaried class. I felt middle-class people were being hurt by the government, so I decided to put some pressure. Happy that they have got some relief.” 
 After his claims, the BJP minister came in attack mode. Parliamentary Affairs Minister <keyword id="74369" type="PERSON" weightage="20" keywordseo="Venkaiah-Naidu">Venkaiah Naidu</keyword> said <keyword id="5268" type="PERSON" weightage="20" keywordseo="Rahul-Gandhi">Rahul Gandhi</keyword> was hurting the poor by blocking important legislations in Parliament. 
 
Jaitley also hit out at the Congress, saying the party did nothing for social security for people when it was in power. 
 
Also, the BJP said the Congress and Rahul Gandhi can take credit for all decisions. “He can take credit for the passage of <a href="http://www.businessinsider.in/searchresult.cms?query=GST+bill">GST</a> and other bills if he lets Parliament function and helps the government in the passage of the bills. These are not the bills of BJP but of the country,” the BJP said. 
 
(Image: Indiatimes)

BJP mocks Rahul Gandhi’s claim of pressuring govt to withdraw tax on EPF, says pass GST and take credit for it too

The taxation laws in India contain a number of provisions to let the tax payers save on taxes. By taking some informed decisions on how you spend and account, you can save on taxes in a legitimate way. Here we discuss some important deductions under the Income Tax Act 1961. Tips to save on income tax Make the right use of Rs.1.5 lakhs limit allowed under Section 80C Investing up to a limit of Rs. 1.5 lakh in schemes like Tax-Saver FDs, PPF (Public Provident Fund), ELSS Funds, NSC (National Saving Certificate), Life Insurance Premiums, National Pension System (NPS), Home Loan Repayment, Payment of tuition fees of your children, EPF, Senior Citizens Savings Scheme, and Sukanya Samriddhi Yojana can enable you for appropriate tax deductions depending on the case. National Pension System This deduction facilitated by Section 80CCD (1B) allows up to Rs 50,000 for contributing to the National Pension Scheme. The NPS makes it possible to invest in equity and debt pension funds for building a corpus for the retirement life. This can be withdrawn at 60 years of age. Health Insurance Premiums Paying for health insurance premiums can let you qualify for a deduction up to Rs 25,000 under Section 80D. This is permitted on top of all the deductions listed above. In case of senior citizens, this limit is up to Rs. 50,000. The taxpayer contributing towards health insurance premiums for himself as well as for a senior citizen can claim a combined deduction of up to Rs. 75,000 per annum. Deduction on your rent If you are getting HRA, it is possible to claim tax deduction on your House Rent. Though there is no upper limit specified for this, there are some rules that place a cap on the maximum deduction. If you do not get HRA but pay towards rent, a maximum claim of up to Rs. 60,000 per annum is allowed under Section 80GG. Deduction on the home loan interest When you have a home loan running, the interest you pay towards the home loan is tax deductible under Section 24 of the Income tax Act. The maximum limit that you can claim in this regard is Rs. 2 lakh. If the house is rented out, there is no upper limit. Money in your savings account The easiest way to save money on income tax is to keep some money in your savings account. Up to a limit of Rs. 10,000 per year, the interest on savings accounts is tax free under the Section 80TTA. In case of senior citizens, this limit is up to Rs 50,000 applicable in cases of both FD and savings account interest. Give for charity Donations made towards charity enable you for tax deductions. Though there is no upper limit for this, there are different rules that restrict the amount deductible on the contributions towards charities. Across a majority types of donations to the NGOs, this limit is fixed at 50% of the donated amount and up to 10% of the total income that is adjusted. If you want to claim this deduction, the NGOs to which you contribute must have 80 G certificate.

How to save Income Tax in India Schemes to Invest in 2019

In his budget speech on Monday, 29th February, Arun Jaitley had proposed to tax 60% of the EPF corpus that were created after April 1, 2016. However this proposal didn’t get down too well with the salaried class of the country. 
 
However, the people who have just entered the EPF will be the worst affected because of this proposal. Even if the government plans to tweak the rule and tax not the entire principal but only the interest portion, even then a major portion of the EPF savings would be gone to the government as tax. 
 
On the other hand, subscribers who believe in invest and forget don’t have anything to worry about since the new rule will not apply to PF balance accumulated till April 2016 and the interest it earns thereafter. 
 
The fact that this budget is so ambiguous has made the salaried class angry and frustrated with the direct attack on their life savings. Even though last year's Budget had talked about the need to allow EPF subscribers to migrate to the NPS, but no steps were taken to facilitate that migration last year or in this budget. 
 
<a href="http://static.abplive.in/wp-content/uploads/2015/12/17160500/Arun-Jaitley-PTI.jpg">Image source</a>

Budget 2016 leaves young EPF subscribers helpless

Finance Minister <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>’s decision to tax the interest earned on 60% of your Employee Provident Fund (<keyword id="45027" type="ORGANIZATION" weightage="20" keywordseo="EPF">EPF</keyword>), when withdrawing before maturity, will burn a hole in both your heart and pocket. While his intention was to earn more revenues for the government’s big ticket social schemes, it hasn’t really gone down well with the salaried class, who have traditionally seen the EPF as a safe source of investing their hard earned money, for a very stable interest-earned regime. 
	 
	Currently, a company can contribute up to 12% of the basic component of someone’s salary as EPF. 
	 
	Still scratching your heads to figure how this new announcement will hit your safe savings? Allow us to explain! 
	 
	Let’s say you earn Rs 2.5 lakh as salary annually, it would mean your in-hand-monthly income would be roughly around Rs 20,000, which would include components such as Basic, HRA, Transport and Special Allowance. Assuming that your basic salary is Rs 11,000, basis how you’ve negotiated your salary structure with your employee, the EPF contribution then would amount to Rs 1,320. As per the new policy, interest earned on 60% of this amount, which is roughly around 8.8% interest on their EPF contribution. It means that the the government will levy tax on the interest levied on Rs792 . So, in the case you have quit the company and want to withdraw your EPF, the government will now tax the interest received on the contribution, 
	 
	Similarly, for an employee with an annual package Rs 5 lakh, the monthly salary is a little over Rs 41,000. If we assume that the basic salary is Rs 15,000, the monthly EPF contribution would be Rs 1800. The monthly interest received on 60% of the Rs1,080 amounts to Rs 95 at 8.8% rate of interest. 
	 
	For an individual earning Rs 10 lakh, the monthly salary is Rs 83,000. The basic component is assumed to be Rs 30,000 and the EPF contribution amounts to Rs3,600. The interest received on 60% of this saving i.e. Rs 2,160, is taxable. 
	 
	Well, it seems the government will be able to churn out huge revenues in FY17 by taxing the EPF. Won’t be surprised if the NaMo government once again meets its revenue target in 2016 as well. But we feel your pain!

Withdrawing your EPF? We tell
you how your savings will take a hit

New Delhi, Feb 3 () The Budget prescribing a Rs 7.5 lakh per annum cumulative upper ceiling for tax-free contribution by employers under employee provident fund (EPF), National Pension System (NPS) and superannuation fund will impact only those with an annual salary of more than Rs 60 lakh, Revenue Secretary Ajay Bhushan Pandey said Monday.
 The proposal is not something unique to India as similar ones are followed in other countries as well, he said.
 Pandey further said taxing dividend income at the hands of the receiver is "most fair" rather than charging a dividend distribution tax (DDT) on the companies paying dividend because the rate of tax levied is then decided on the basis of the total income of the recipient.
 Speaking about the Budget provision that proposed a combined upper limit on tax-free employers' contribution towards the NPS, superannuation fund and provident fund at Rs 7.5 lakh annually for an employee, Pandey said if there is no limit, it will allow structuring of the salary into various components to lower the tax outgo.
 "If you consider the Rs 7.5 lakh (threshold), it will affect only those with an annual salary of more than Rs 60 lakh," Pandey said at a post-Budget interaction organised by Ficci.
 "Having no limit also allows structuring of the salary into various components where this particular thing could be hiked up and then actual tax could be very less. This threshold is not something very very unusual we have done. It is being developed in many parts of the world," he added.
 Under the existing provisions, the contribution by the employer to a recognised provident fund exceeding 12 per cent of salary is taxable.
 The Budget 2020-21 also proposed to withdraw DDT saying that henceforth, the tax will have to be paid by the recipients at the applicable rate.
 Currently, companies are required to pay dividend distribution tax (DDT) on the dividend paid to its shareholders at the rate of 15 per cent plus applicable surcharge and cess, in addition to the tax payable by the company on its profits. The total rate works out to be 20.5 per cent.
 Pandey said there has been a demand from every section of industry that DDT is "very very regressive" on many counts particularly for retail investors falling in lower tax slab and, hence, the government has accepted in principle that it should be taxed at the hands of investors at applicable rate.
 Also, foreign investors were unable to claim credit in their home country because DDT did not exactly qualify as an income tax.
 "We did a study on how dividends are taxed in various parts of the world. In many jurisdictions, it is taxed at the applicable rate and that seems to be most fair. The best option available is that it should be charged at the applicable rate and that should be (calculated as) part of income because every income is taxed at applicable rate and then nobody will have grudge," Pandey said.
 The DDT has been in place for more than 20 years. In 2002, it was abolished but in 2003, it was brought in again. JD DP HRS

Limit on tax-free employer contribution to retirement funds to impact those with salary above Rs 60 lakh

Tax saving is something that all of us typically think about only in the last quarter of a financial year. As we enter January, we get an email from our company’s HR department to submit our tax-saving details for the year. This email makes us realise that we haven’t made any tax-saving investment yet. We rush to invest to save taxes and end up making hurried investment decisions. Sure, even this way, we do end up saving tax. But that shouldn’t be the sole purpose of tax-saving <keyword id="6362476" type="ORGANIZATION" weightage="20" keywordseo="investments">investments</keyword>. When planned and executed properly, tax-saving investments can help you build wealth over the long-term as well. By their nature, tax-saving investments are long-term and can be used for goals like child’s education or marriage and your own retirement. Under Section 80C, a taxpayer can invest up to Rs 1.5 lakh in a year to save tax. This is a decent amount to build a corpus of wealth as well. But these investments should not be done in the last few months with little time and after little thought. These investments should be planned and started in the beginning of the financial year itself. Here is how you can plan your tax-saving investments for FY2017-18 to make maximum gains. Figure out the tax-saving expenses that you can claim Under Section 80C, there are a number of expenses that qualify as tax-saving deductions. This includes the life insurance premium you pay, school tuition fees for two children, repayment of your home loan, etc. These are expenses that you make anyway and they should be used to save taxes. Figure out how much will be the amount of these expenses. This will help you understand how much of the Rs 1.5 lakh 80C limit you need to invest. Build a portfolio of tax-saving investments Once you know how much you will need to invest to fulfil the 80C limit, you should think about where you want to invest that money. There are a number of investment options available, like ELSS funds, PPF, NPS, SukanyaSamriddhi, fixed deposits, NSC, etc. Choose the kind of investment that you are comfortable with, which matches your risk profile and start investing in them right away. It is easier to invest a small amount every month through the year than a big amount in one go at the end of the year. Make good use of ELSS funds ELSS funds are equity <keyword id="6357979" type="ORGANIZATION" weightage="20" keywordseo="mutual-funds">mutual funds</keyword> that come with a lock-in period of 3 years. They are considered to be the best tax-saving investment because of the flexibility they come with and the ability to earn inflation-beating returns. Everyone should invest some amount of their 80C limit in these funds. The equity-related risks get mitigated over the long-term and the returns earned by these funds also become tax-free after a year. Ideally, the younger you are, the more you should invest in ELSS funds. Link investments to goals It is always good to have investment goals. With a target in mind, it would become easier for you to choose a tax-saving investment. For example, for a goal like retirement, you can rely on your investments in EPF or PFF. But for a goal that is just 5-7 years away, you can put money in tax-saving fixed deposits or ELSS funds. This way, investments with different lock-in periods can be used to achieve different short-term and long-term goals. Don’t invest and forget This is a mistake that many investors do, especially with ELSS funds. It is of no use to check a fund’s performance every single day, but you should at least once in 6 months or a year. You can stop your SIPs in an underperforming ELSS fund any time you want and start SIPs in another ELSS fund to avail the same tax benefit. This flexible nature of ELSS funds should be used to earn optimum returns. Think beyond 80C Tax-saving doesn’t end with Section 80C investments and expenses. There are other ways to save taxes that should also be utilized by taxpayers. Medical insurance is tax-deductible under Section 80G. An additional ₹50,000 can be invested in NPS under Section 80CCD. Taxes can also be saved by making certain donations under Section 80G. You should find out about these tax-saving deductions and avail as much benefit as you can. These are some things that the common taxpayer can do to get the most out of saving taxes this year. But the most important thing is to not procrastinate. Plan your investments and start early. (The article is authored by Archit Gupta, Founder &amp; CEO, ClearTax.com)

You Searched For "epf tax" and got 10 results

Here's why the new EPF rules make good sense in the long-run

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BJP mocks Rahul Gandhi’s claim of pressuring govt to withdraw tax on EPF, says pass GST and take credit for it too

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Here’s how you can plan your investments to gain maximum savings

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