March 1: Revenue Secretary Hasmukh Adhia on Tuesday clarified that Public Provident Fund (PPF) contributions will continue to be tax exempt, while only interest accrued on 60 percent contribution to Employees Provident Fund(EPF) will be taxed after April 1, 2016..
The principal amount on the EPF will continue to remian tax free.
Small salaried employees with up to Rs 15,000/month income will be kept out of purview of proposed taxation of EPF, Adhia further said.
Notably, Budget 2016, announced by Finance Minister Arun Jaitley on Monday proposes to tax part of Employee Provident Fund (EPF) withdrawals from April 1, 2016.
Those withdrawals over 60 percent of EPF will be eligible for tax while the remaining 40 percent will be tax free.
“In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40 percent of corpus to be tax free will apply in respect of corpus created out of contributions made on or from 1.4.2016,” said Finance Minister Arun Jaitley in his budget speech.
The tax will be imposed on EPF corpus withdrawal exceeding Rs 1.5 lakh each.
So far EFP withdrawal have been free from tax exemptions in last five years.