Modi Government has allowed Employees’ Provident Fund Organisation (EPFO) and Exempted Provident Fund Trusts to invest in public sector debt ETFs (Exchange Traded Funds) like Bharat Bond ETF.
Middle class had high hopes from the budget. But the government was focused on other things in the budget. Today’s budget has given more attention to economy, infrastructure and health. The central government increased the health expenditure by a massive 137 percent. At the same time, it also announced to change the definition of small companies, which will be the basis of capital. At the same time, those people who save tax through Provident Fund (PF) were given a blow in the budget. Let’s know the complete detail.
Also Read: EPF: Employers to lose deduction for employee’s contribution to EPF if they don’t deposit on time
These people will be harmed
According to the announcement made to the PF in the budget, if your interest income from your PF in a financial year is more than 2.5 lakh rupees, then tax will be charged at the normal rate. In simple words, higher interest (more than Rs 2.5 lakh) will be taxed on the PF. The government’s proposal is a setback for high income people. But with this the government will get several crores as tax.
Understand the whole rule
If you get more than Rs 2.5 lakh interest on the PF amount in a financial year, then that extra money will be included in the taxable income and will be taxed at the normal rate. Addressing the press after the budget, officials of the Finance Ministry said that this new rule will affect more than 1 percent of the total PF customers.
Such a proposal has come before
This is not the first time the government has proposed to tax PF money. The 2016 budget also proposed that 60% of EPF will be taxed on interest earned. But this proposal was withdrawn after large scale protests.
