[sdp1975]

Some details on EPF taxation :

http://capitalmind.in/2016/02/cleari...ref=budget2016

And on low annuity returns :

http://capitalmind.in/2010/01/low-an...urns-in-india/

[nowwhat?]

One more opinion on this disaster.

Budget 2016: What should we do now?

[RocketRaccoon]

60% of interest accrued on EPF will be taxed. The principle amount will remain tax free as per revenue sec. More details here -
http://economictimes.indiatimes.com/...w/51206058.cms

[gsurya]

While everyone is focused on the tax on EPF aspect, the real disaster is that employer contribution to EPF is now COMPLETELY locked in until retirement. You cannot do any partial withdrawal.

To think that I built my first home couple of decades ago, mainly due to be able to draw on my PF, including employer contribution part.

[tsk1979]

Originally Posted by gsurya

While everyone is focused on the tax on EPF aspect, the real disaster is that employer contribution to EPF is now COMPLETELY locked in until retirement. You cannot do any partial withdrawal.

To think that I built my first home couple of decades ago, mainly due to be able to draw on my PF, including employer contribution part.

If they allow you to withdraw that, how will they keep giving free loans to their cronies? And it makes sense. How much money did the middle class give for election campaign? Those who gave the money, wan't it back, and this is where it will come from.

[shivasuma]

After facing a backlash, the govt "clarifies" that only the interest part of PF will be taxed. And PPF is still tax-exempt apparently.

[MikeRX]

Originally Posted by manowar

Which of the 4 PSU insurers appears to be most attractive from a long term investment point of view?

Hard to give an opinion now, without the prospectus of the company. Suggest you wait for the prospectus before deciding on investing in them. Another point to look out for is how much of their assets are locked in, at the Government's insistence, on dead assets/projects before making a decision.

With rising inflation, stagnant salaries and no increase in tax slab, the budget makes it hard for salaried employees. And considering that only 5.5% of India's population pay taxes, out of which 60-70% approx will be salaried, the Government should've done things to increase the % of people who pay taxes to increase their revenue and not burden those already paying them!

And another point to ponder are the subsidies given to farmers. I am all for helping poor farmers reap the benefit of their toil but shouldn't a distinction be made between the poor and well-off farmers before giving a blanket subsidy?! I have come across a few well-off farmer clients of mine, who take bank loans based on the premise that it'll be written off by the Bank on insistence from the Government. And these are all paid for by the those paying taxes.

All in all this budget has nothing cheerful for the common man.

[paragsachania]

Originally Posted by gsurya

While everyone is focused on the tax on EPF aspect, the real disaster is that employer contribution to EPF is now COMPLETELY locked in until retirement. You cannot do any partial withdrawal.

To think that I built my first home couple of decades ago, mainly due to be able to draw on my PF, including employer contribution part.

Originally Posted by tsk1979

If they allow you to withdraw that, how will they keep giving free loans to their cronies? And it makes sense. How much money did the middle class give for election campaign? Those who gave the money, wan't it back, and this is where it will come from.

Partial withdrawal (or PF Advance) is still in place with only one change.

Earlier one could withdraw Employee + Employer + Interest part but now its limited to just Employee + Interest.

This is for the purpose of Home Construction or other financial needs.

This rule is applicable even before (Feb 10, 2016) the Budget introduced the taxes on PF withdrawals.


Here are the excerpts:

Continuity of your EPF membership

Existing rule :
If an employee withdraws full EPF amount after resigning from the job, his/her PF membership is deemed to be terminated. That means he/she is not a member of EPF scheme after the full withdrawal.

New Rule :
An employee can only withdraw his share on resigning from the job. You cannot withdraw full EPF amount before attaining the retirement age. So, you will still be the member of EPF even if you cease to be an employee of a EPF covered establishment. I believe that concept of ‘In-operative EPF a/c‘ may cease to exist.

Retirement Age

Existing rule :
The retirement age is considered as 55 years.

New Rule :
The age of retirement has now been increased from 55 to 58 years.

EPF Withdrawal provisions

Existing rule :
You (employee) can withdraw the full PF amount on retirement from service (55 years) or on cessation of employment and not being employed for at least 60 days.

New rule :
As discussed above, the retirement age has now been increased from 55 to 58 years and the option of full EPF withdrawal on resignation will not be allowed. You can withdraw your contributions + interest portion only.

90% of EPF balance

Existing rule :
You can withdraw up to 90% of your entire PF balance (employee share + employer share) on attaining 54 years of age or within one year before actual retirement, whichever is later.

New rule :
You would now be able to avail this option only on attaining the age of 57 years. The age has now been increased from the current 54 years to 57 years.

Source: http://www.relakhs.com/latest-epf-wi...10th-feb-2016/

[GrammarNazi]

Govt may partially roll back the EPF rule : Source

Good, that ONE thing pinched the class that's vocal & connected. Wish they thought twice before touching something sensitive.

[naveenroy]

Hahaha, I wonder how they even thought they could get away with the PF taxation. Reading up about the backlash on many social media pages, I was expecting a rollback. Good they "clarified".

[Chetan_Rao]

It's all a bit of trying 'how far is too far' tomfoolery.

What surprises me more is implementing this move could've killed off the 'voluntary' PF products (VPF & PPF), and the funds available to the govt to play with in those schemes are nothing to scoff at.


P.S. The cynical part of me suspects this was just an experiment to ascertain the level of resistance (no real intent to implement right now), and we haven't seen the last of this idea. I'm thinking we'll see this again, albeit in a multi-year gradual roll-out. The govt. needs more money, and it's plenty clear they ain't going to target the big daddies. Salaried chumps to the altar, one way or another!

[gsurya]

Originally Posted by shivasuma

After facing a backlash, the govt "clarifies" that only the interest part of PF will be taxed. And PPF is still tax-exempt apparently.

This is not true, EPF & PPF are to be treated identically as far as I know, from 1st April 2016. This also means all tax earned on the corpus so far will be taxed. Plus the principal we put in from 1st April will be taxed.

This will be an accounting nightmare for individuals & a bonanza for CAs. IT dept will enjoy harassing taxpayers who are unable to calculate their tax dues properly during withdrawal.

[shivasuma]

Originally Posted by gsurya

This is not true, EPF & PPF are to be treated identically as far as I know, from 1st April 2016. This also means all tax earned on the corpus so far will be taxed. Plus the principal we put in from 1st April will be taxed.



This will be an accounting nightmare for individuals & a bonanza for CAs. IT dept will enjoy harassing taxpayers who are unable to calculate their tax dues properly during withdrawal.

That's what I thought too. But govt has clarified that PPF will be EEE while interest on 60% of EPF post 31st March 2016 will be taxed.

[sdp1975]

Folks, the twitter hashtag is #RollBackEPF . Feel free to voice your displeasure against this measure.

Remember that every message counts.

[Dry Ice]

Originally Posted by sdp1975

Folks, the twitter hashtag is #RollBackEPF . Feel free to voice your displeasure against this measure.

Remember that every message counts.

So is #bakwaasbudget.

Maybe setting up a business and evading taxes is the only way forward in this country.