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With the tax on EPF, how safe are your investments?

How safe are your investment and pension funds after the government proposed to tax employee provident fund?

business Updated: Mar 02, 2016 15:01 IST
Suchetana Ray
At present, withdrawal from EPF is entirely tax-free.
At present, withdrawal from EPF is entirely tax-free.(Representative image)

With the government proposing to tax the interest accrued on 60% of employee provident fund, this is how your investments are impacted:

Employee Provident Fund: Interest accrued on 60% of the corpus will be taxed during withdrawal. But the tax is applicable only on deposits made after April 1, 2016.

Investment: No tax

Withdrawal: Tax on interest earned on 60% of the corpus.

Condition: The tax on the interest is applicable on those earning salaries above Rs 15, 000 per month.

Read: In defence of EPF tax: Govt not afraid of taking on moneybags

National Pension Scheme: 60% of the corpus will be taxed on withdrawal.

Investment: No Tax

Withdrawal : Tax on 60% of the corpus

Condition: Corpus fully taxable till March 31, 2016

Employer managed pension funds: Just like EPF, interest accrued on 60% of the corpus will taxed on withdarwal. On this as well, this tax is applicable from April 1, 2016.

Investment: No tax

Withdrawal: Tax on interest earned on 60% of the corpus.

Condition: The tax on the interest is applicable on those earning salaries above Rs 15, 000 per month.

Superannuation funds managed by employers: 60% of the corpus will be taxed on withdrawal.

Investment: No Tax

Withdrawal : Tax on 60% of the corpus

Condition: Corpus fully taxable till March 31, 2016

Read: #epfnotax: Petition to withdraw EPF tax gets 4,631 signatures on day 1

PPF & NSC: Public Provident Fund and other small savings schemes like the National Savings Certificate remain tax free.

Investment: No tax

Withdrawal: No tax

Condition: Investments of only Rs 1,50,000 can be made per year.

Pension funds offered by LIC and other private companies: These schemes continue to remain tax-free, if designed under section 80C

Investment: No tax

Withdrawal: No tax

Condition: Interest accrued and bonuses, if applicable, are also not taxable

Read: Only EPF interest to attract tax, withdrawals will be exempted