Finance Minister Nirmala Sitaran said that the government is ready to consider the decision to impose tax on the provident fund. However, this decision is in principle, so that 15000 earners should not be discouraged from contributing.
EPF tax: In Budget 2021, Finance Minister Nirmala Sitharan announced tax on provident fund. After that many questions are arising about this. In a special conversation with The Hindu Business Line, the Finance Minister said that the government is ready to review this decision. Together, he also said that there is no plan to merge Employee Provident Fund and National Pension System (EPF and NPS).
Regarding EPF Tax, Nirmala Sitharaman said that we took this decision so that 15000 earners do not hesitate to contribute to EPF. The government is fully prepared to discuss the limit of 2.5 lakh, but this decision is related to the principal. Through this, it has been decided to impose tax on those contributors who are contributing much more to this fund than the average Indian earning. After the announcement of the budget, now the investment of more than 2.5 lakhs in the provident fund will be subject to interest income tax on the additional amount. There will be no tax on interest earned up to 2.5 lakh.
Tax exemption on three levels
According to the budget announcement, the Employee Provident Fund (EPF) and Voluntary Provident Fund (VPF) are included in the limit of 2.5 lakh. Public provident fund i.e. PPF is kept separate from this and up to 1.5 lakh can be invested in a financial year. Employee Provident Fund comes under EEE (exempt, exempt, exempt) category. There are three levels of tax exemption. One gets deduction under 80C by investing. Interest income is also tax free and maturity is also completely tax free.
There will be a consideration to bring petrol and diesel within the purview of GST
On the skyrocketing prices of oil, Nirmala Sitharaman said that the central and state governments should consider together in this matter and solve the problem. Regarding bringing petrol and diesel under the purview of GST, he said that this will also be an option, after which the price of petrol and diesel will be same in the whole country. The matter will be considered by the GST Council, but still the matter is connected to both the Center and the state.
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