Big investors invest huge amount in PF and EPF which makes the returns tax free but the government has taxed more than 2.50 lakh rupees investment in the budget this year.
The government announced in the budget this year that only investments of up to Rs 2.50 lakh in Provident Fund (PF) or EPF during the financial year will be tax free. That is, if you invest more than this, tax will have to be paid on its return. The government’s move is aimed at stopping large investors (HNIs) who invest large sums in PF or EPF to save tax.
According to ET, a source in the finance ministry said that large investors used to put huge amount of money in PF and EPF so that their returns would become tax free. Till now the return of the entire amount invested in PF or EPF was tax free. But now it will no longer be so.
Sources said the number of members of EPF is 4.5 crore. Of these, 1.23 lakh people are HNIs who invest large amount in EPF every month. The total contribution of these HNIs during the fiscal year 2018-19 was Rs 62,500 crore. The government gives an assured 8% return on it. This return from above is also taxfree.
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Sources said that the total contribution of the largest investor in EPF is Rs 103 crore. At the same time, two big investors in the second number have invested Rs 86-86 crore in EPF. Sources also said that 20 big investors have invested a total of Rs 825 crore in EPF. The top 100 HNIs have invested a total of Rs 2000 crore.
Sources also said that out of the total EPF account holders, only 0.27 per cent have invested an average of Rs 5.92 crore. That is, these people are tax free of Rs 50.3 lakhs annually.
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