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Old 6th March 2016, 01:58   #46
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Default Re: Budget 2016 at a glance

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Originally Posted by poloman View Post
How many of were aware of the EPF notification on the change in EPF withdrawal rules which prohibits you from withdrawing the employer's contribution till you are 58. Also the change in the age for withdrawal from 55 to 58. Now if you are fired or took early retirement and want to start a new business you won't get 40% of your pf. How just is that? Full details here.
http://www.relakhs.com/latest-epf-wi...10th-feb-2016/
If what you are saying is true, it's a double whammy. But apparently it's not that bad.
The rule of not allowing withdrawal of employer's contribution is applicable only if your EPF account is still active. If you took early retirement, or for whatever reason (such as new employer doesn't contribute to PF) your account is not operated for 36 months or more, it becomes 'Inoperative', and will not earn interest after that. In such cases full withdrawal is allowed. This information i managed to dig from the comments section of another post in same blog you shared. Just imagine - if they don't allow to withdraw full amount AND you don't earn any interest on that, that would be too bad and ridiculous to be true!
http://www.relakhs.com/epf-withdrawa...ble-new-rules/

Last edited by SilentEngine : 6th March 2016 at 01:59.
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Old 7th March 2016, 20:34   #47
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Default Re: Budget 2016 at a glance

I just came to know that contribution to EPF it is not compulsory for people earning a salary of 15k or more every month. But I guess the Employer contribution will continue to be deposited.
My Q here - What would be the procedure to pull the plug on PF contribution? I hear that once you opt for it, it cannot be undone.
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Old 8th March 2016, 13:53   #48
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Ok, tax on EPF is rolled back for now.

Finance minister Arun Jaitley on Tuesday announced the rollback of proposed tax on withdrawals from employees' provident fund.
"The purpose to tax EPF withdrawals was to encourage a pensioned society. However, in view of the representations made to the government against the proposed tax, I withdraw it" finance minister Arun Jaitley informed the Lok Sabha on Tuesday.
However, the tax proposal for NPS scheme has been retained

http://timesofindia.indiatimes.com/i...w/51304022.cms
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Old 9th March 2016, 10:28   #49
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Default Re: Budget 2016 at a glance

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"The purpose to tax EPF withdrawals was to encourage a pensioned society."
If taxed, how does it encourage a pensioned society?
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Old 9th March 2016, 11:53   #50
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If taxed, how does it encourage a pensioned society?
My understanding is that the tax is applicable only if you cash out your EPF. No tax if you move it to an annuity ( and get a monthly pension from that ).
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Old 9th March 2016, 13:14   #51
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Default Re: Budget 2016 at a glance

The Finance Minister finally relents and rolls back the controversial EPF tax proposal. Proposals dropped are;

1. 60% tax on EPF on withdrawal, if not invested in annuity plan
2. and the highly controversial move to cap employer contribution at Rs. 1.5lacs.

However, the proposal to exempt 40% (meaning 60% will be taxed on withdrawal) of corpus withdrawal by NPS subscribers has been retained.
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Old 9th March 2016, 13:20   #52
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Default Re: Budget 2016 at a glance

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However, the proposal to exempt 40% (meaning 60% will be taxed on withdrawal) of corpus withdrawal by NPS subscribers has been retained.
Which is actually still better. Unless I am grossly mistaken I think the NPS was earlier fully taxed at redemption?! I may be wrong here but I think that's how it was...
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Old 9th March 2016, 17:46   #53
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Which is actually still better. Unless I am grossly mistaken I think the NPS was earlier fully taxed at redemption?! I may be wrong here but I think that's how it was...
Its still a grey area but here is my understanding;

On retirement;
1. 40% of the funds should be used for purchase of annuity (of course, annuity income is taxable)

2. Rest 60% can be withdrawn as a lumpsum and will be taxable.

Premature Exit (withdrawal before retirement)
1. At least 80% of the accumulated funds should be used for purchase of annuity (annuity income is taxable)

2. The rest can be withdrawn as a lumpsum and is taxable.
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Old 9th March 2016, 18:34   #54
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I think one regressive decision still remains:

If you want to do a partial withdrawal of your EPF for specific purposes like purchase of property / marriage / childrens education, you cannot do it from Employer contribution, only your own.

Employer contribution becomes available only at age 58 or premature retirement.
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Old 9th March 2016, 21:02   #55
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Originally Posted by m8002? View Post
My understanding is that the tax is applicable only if you cash out your EPF. No tax if you move it to an annuity ( and get a monthly pension from that ).
Yes, as per the proposal, if funds were moved to annuity then the same would not be taxed. However, the monthly income/pension from annuity is taxable. And also, while I do not know much about annuities, reading on the internet seems to suggest that the returns are not very good.

Cheers,
S
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