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.
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